What Is The Cheapest Tax Software for 2017?

There are three major tax preparation software packages on the market that most do-it-yourself tax preparers will use – TurboTax, TaxACT and H&R Block. Comparing these three options to find the cheapest can be a real chore. Each has several editions with varying features. As a result, it is important to compare competing editions between the providers, not just to look simply at the lowest overall price that any seem to be offering.

What is vitally important in selecting the least expensive tax software is making sure that you get the right one based on your own individual income tax situation. Each of these providers has a very attractive “free” package. But with two of them, they charge for a state return. The one totally free option is only for very basic returns. It won’t help those who have a complex tax return.

To help you sort through this mess, let’s take a look at the offerings of all three companies, as well as the individual editions, and the charges related to each. Note that the costs listed below are for the online versions of each tax software. The cost for the downloadable versions is listed at the end of the article.

TurboTax

TurboTax is highly regarded in the self-prepared income tax universe, and it is the most popular tax software. But it has five different editions, and you have to choose the right one for your tax situation. Otherwise, you’ll need to upgrade.

Here are summaries of all five editions:

turbotax-pricing

Free Edition

This version is for simple tax returns, such as Forms 1040EZ and 1040A. It is free for both federal (including the Earned Income Credit, or EIC) and state returns. There is also no fee paid to TurboTax, as the name implies, and no fee to e-file. But just in case you’re thinking this is the way to go, remember that this edition is very basic. Essentially, it does none of the work that TurboTax is so well-known for.

For example, it does not transfer your information from a previous year. It also doesn’t provide online access to all tax returns on file, or search for deductions and credits. Still, for simple returns, it is the only free option available.

Deluxe

This is TurboTax’s most popular edition, and it provides most of the services the product is known for. It is recommended if you have tax deductions, as the edition is specifically designed to maximize those deductions. The cost is $34.99, and the e-file is free. There is an additional charge of $36.99 for state returns (per state). So if you have to file in your state, you’re really looking at $71.98 – and that’s assuming you don’t have to file for more than one state. Check out the TurboTax Deluxe Edition here.

Premier

This is the TurboTax edition you will need if you have taxable investments or rental property. It does everything the Deluxe version does, but it adds sale of investment securities, automatic calculation of cost basis for investments sold, and preparation of Schedule E for rental properties. The cost is $54.99 and includes free e-file.

It has the same additional charge for preparation of your state return(s), at $36.99 per state. Plan that you’ll have to come up with $91.98 for this edition if you have to file in your state. Check out the TurboTax Premier Edition here.

Self-Employed

This edition does everything that the Premier edition does, but it also adds preparation of Schedule C (sole proprietors). It maximizes business tax deductions and depreciation, and also reports income and expenses from S-Corporations, C-Corporations, partnerships, and multi-member LLCs (but not the actual returns for each). The cost for this edition is $89.99 including free e-file. And once again, many of you will have to add in the per-state charge of $36.99, bringing the actual cost to $126.98. Check out the Self-Employed Edition here.

TurboTax Business

While TurboTax used to offer this edition in an online version, it is now software/download-only. They have instead improved the Self-Employed edition that I just mentioned, making it a viable option for even more filers. If you have a more complex return and need the Business edition, though, you will need to download it this year.

This is the edition for small businesses other than those using a Schedule C. It includes preparation of returns for small S-Corporations, C-Corporations, partnerships, estates, trusts, and multi-member LLCs (this is different from, and more complex than, the capabilities of the Self-Employed edition above).

So, if your business takes one of these forms, you’ll need this edition. The cost is $149.99, which includes free e-file, but once again there is a $36.99 per state charge. The true price is then $186.98.

Related: Do You Need a Sole Proprietorship, an S-Corp, or an LLC?

With each of the editions, you start the process for free and just pay when you are done and ready to file.

Go to TurboTax’s Official Website

TaxACT

TaxACT works much the same way as TurboTax, in that it has multiple editions. In the past, it had a confusing array of editions and bundles. Recently, however, they have greatly simplified their production into three editions.

taxact

Free Federal. The free edition from TaxACT is limited to simple returns filed on Form 1040EZ and 1040A.  It is free for both your federal and state returns. The free edition also includes free e-file with the IRS. Check out the TaxAct Free Edition here.

Plus: The next level up is ideal for home owners and investors, as well as those itemizing their deductions. It costs $27 for the federal return and $33 for the state return, bringing the total to $60. Check out the TaxAct Plus Edition here.

Premium: This edition is designed for those who are self-employed, contractors, or freelancers. It costs $37 for the federal return and $33 for a state return. Total cost for federal+state (assuming you’re only filing in one state)? $70. Check out the TaxAct Premium Edition here. Before buying either the Plus or Premium editions, however, you must like at the Ultimate Bundle.

Ultimate Bundle. TaxAct does something a bit odd with its pricing. After running through all of the above editions with different prices, it then offers all tax forms and includes both federal and state returns in one bundle that it appropriately calls its Ultimate Bundle. The cost–$29.99. And once again, e-file is free. So for those that aren’t filing a 1040EZ (where the free edition is available) and plan to file a state return, the Ultimate bundle is the way to go. Check out the TaxAct Ultimate Bundle here.

**Home and Business Bundles. TaxACT offers three separate bundles if you plan to download their software (versus using the online version). These include filing options for a 1065 partnership return, a 1120S Sub-S Corporation, or an 1120 (C Corporation) return, at just $99.99 for each bundle. Each includes the basic package from Deluxe Federal and one free e-file. That price includes both business and personal returns, and both federal and state returns.**

Go to TaxACT’s Official Website

H&R Block

H&R Block has five editions, and you have to choose the one that most closely matches your tax profile.

hr-block

More Zero Free Edition. H&R Block offers a “free” edition designed for simple returns and first-time tax filers. Like TurboTax and TaxAct, there is also no fee for a state return. Check out the H&R Block Free Edition here.

Deluxe. This edition is recommended for those with a more complicated return, such as freelancers. It has all the features of the Basic edition, as well as the ability to add freelance and independent contractor expenses (Schedule C-EZ). You can also store your return for up to 6 years with this edition. The cost of the package is $29.74. A state return adds $36.99 per state, so the total cost for this edition (federal and state) is $66.73. Check out the H&R Block Deluxe Edition here.

Premium. This edition has all the features of the Deluxe edition, but it is geared toward investors, small business owners, and investment property owners (Schedule E). The cost for the Premium edition is $46.74. As with the other editions, a state return will cost $36.99. The total cost for the federal and state package is $83.73. Check out the H&R Block Premium Edition here.

**Premium & Business. This edition is downloadable software (not an online edition, like the three listed above). It has all the features of the Premium edition, but is for preparation of corporate (S and C corporations), partnership, LLC, estates and trusts, and even non-profit income tax returns. It also produces payroll and employer forms, and unlimited business state program downloads. The cost for this edition is $62.97, and federal e-file is free. Check out the H&R Block Business Edition here.

Go to H&R Block’s Official Website

Worth Mentioning…

There’s a newbie to the free online tax filing game this year, in the form of an already-popular credit checking company: Credit Karma. Their new program, called Credit Karma Tax, is guaranteed to be completely free for almost all filers. The only exceptions are those filing small business returns — those filing small business expenses, however, can still use the program. You can check out our review of Credit Karma Tax here, which is brand new for 2017 (tax year 2016).

In Summary

All three vendors above have very similar editions available based on your tax situation. There is a wide variation in what each charges for their plans. TurboTax is definitely the highest priced, while TaxACT is clearly the lowest and H&R Block rests comfortably in the middle. It may come down to which program you have used in the past, and are the most comfortable working with.

Here is a summary of the costs based on various tax situations:

  TurboTax H&R Block TaxACT
Simple Returns
(Federal Only)
FREEFREEFREE
Simple Returns
(Federal + 1 state)
FREE$9.99FREE
Returns with Itemized Deductions
(Federal + 1 State)
$71.98
(Deluxe)
$81.18
(Basic)
$29.98
(Plus)
Returns with Investments
(Federal + 1 State)
$91.98
(Premier)
$89.68
(Deluxe)
$29.98
(Plus)
Returns for Real Estate Investors
(Federal + 1 State)
$91.98
(Premier)
$102.43
(Premium)
$29.98
(Plus)
Returns with Self-Employed or Small Business Income
(Federal + 1 State)
$116.98
(Home & Business)
$102.43
(Premium)
$36.98
(Ultimate Bundle)
Go to TurboTaxGo to H&R BlockGo to TaxACT

Downloadable Versions

For those that don’t want to prepare their taxes online, downloadable versions of the tax software are available:

TurboTax: $29.99 to $99.99

TaxACT: Up to $70

H&R Block: $25.46 to $74.64 plus the cost of state returns and state e-file.


Topics: PodcastTaxes

36 Responses to “What Is The Cheapest Tax Software for 2017?”

  1. Rob,
    I’ve been using FreeTaxUsa.com for a few years now. I found it on the IRS web-site as one of the recommended free e-file sites and have been using ever since. I did all sorts of things with it – simple files, standard deductions, itemized deductions, W2 & scholarships. I file federal for free online and then file state either paper for free or many states have their own online software to file, which is also free (I’ve done 2 or 3 states online so far, separately from federal. Yes, it’s a little more work, but for the cheap, ahem, frugal of us it may work). I have been filing paper forms before freetaxusa, so am often confused why people pay to download software if it’s available online for free. I understand going to CPA if you need someone else to do your taxes, but if you DIY, then I am wondering if I am missing out on something important, and don’t know something everyone else does.
    Thanks!
    Mariya

  2. Rob,

    A few note that once you use a higher level of Turbotax you can’t import in later years to lower versions, Premier to Deluxe for example. Also while other vendors like H&R block will import Turbotax that wasn’t the case from H&R to Turbotax. I use to use Turbo tax H&B with my sole proprietorship, then Intuit kept increasing its price and changed over to premier but couldn’t do switched over to H&R block for a few years. But later after getting married switched back to turbo tax and using Premier now, since that level allowed for the small business, just without all the walking through that I didn’t need anymore. By the way great podcast.

    Stan

  3. Thanks Rob, I especially like your breakdown of the prices for the different software packages. Although Turbo Tax appears to come out costing more than the other two, I need to let you know that from my own experience ( 7 years to be exact) Turbo Tax has gotten me a far larger refund than both Tax Act and H&R Block have quoted me for seven consecutive years. And they also offer better than average audit support. So, if a larger refund and some peace of mind is what most taxpayers are looking for, I suggest you revise your article to include some actual quotes so that readers don’t get discouraged by the $99.99 cap. Thanks and continue to provide quality articles for thrifty dads like myself.

  4. Since I’m a first-year Direct Sales Consultant, I had to add my business to my taxes. I had no idea that meant my return was going to cost more. I filled out my return with the three of these and the best price I got for federal and state was $29.99. $30 for my tax return. I went back to searching and found myself at DIY Tax. I thought that Rob would want to know.

  5. Michael Bennett

    I have been using turbo tax online. Found it easy to use for 1040, schedule A, and State returns. However, they just sent me a letter. Someone accessed my 2013 return on 12-9-14. Now I question their security.

  6. I used Turbotax for over 10 years but dropped them this year as their price approached $91 to do Fed, State, itemized deductions and investments. I got halfway thru Tax Act (thank goodness you don’t pay until you hit the File button) and realized they do not directly import from Betterment and Vanguard, but require a
    CSV file instead. Near as I can tell, neither Betterment nor Vanguard will supply this. So I took a leap of faith and bought H&R Block Deluxe + State for $32.95 from Amazon as download software for my PC. Betterment and Vanguard imports were very easy, just enter your login credentials and the H&R Block software imported all their forms seamlessly.

    Turbotax has sent me two emails begging for me to come back and offering a $25 spiff to do so but I believe they have lost me as a customer forever by their outrageous price increase this year.

    • Rob Berger

      Kenneth, thanks for sharing your experience on this. TurboTax has made several mistakes this year, including the price increase. I still use them for our children’s tax returns, but they have certainly lost some customers.

    • Doug Anderson

      Thank you for sharing this. I feel the same way about the huge price increase for TTax to $92 for Premier (for Itemizers and Investors). I too will try the H&RB Deluxe since they can reportedly import all investment information directly from Vanguard.

  7. You stated that you didn’t understand why people would buy Deluxe software from H&R Block rather than Deluxe + State. Not all states have an income tax, thus their residents are not required to file state income tax returns. Makes sense to me.

  8. Jilani, M

    Hi Rob, Very nice and productive discussion. I am in the same boat like Kenneth, been Turbo Tax customer (both Individual and Corp) for over 8 years and this years increase in prices is ridiculous. I gotta do a couple of C Corps and an S-Corp for 2014, for some friends, would you recommend the choice Kenneth has?? never tried em before though??? need advice, thanks

    Jilani
    Queens NY

  9. This season I am switching from TubroTax to TaxACT. I take a standard deduction but I have investments and for TubroTax to allow to manually enter a simple 1099B it requires me to jump all the way to premier! The table on this site says for investments you should jump to TaxAct Ultimate but I had no trouble putting investments into the free version. I actually did my entire return on both the taxact and turbotax site and came up with the same number, but I was able to file for free on one and the other wanted me to pay $55.

  10. Bev, Y

    None of the numbers you refer to actually matches up with what I see on H&R block. Not saying you were incorrect at the time this was published, but I think they increased their prices during the tax season, which I find ridiculous and unnecessary.

  11. Arlene G

    Hi, and thanks for your help. I’m trying TaxAct for the first time, and I’m kind of ridiculous when dealing with this sort of thing. Will TaxAct accept log in credentials from my financial institution? UBS doesn’t support TaxAct.

  12. Not true. Turbotax charges 29.99 for state tax. And they don’t tell you that until you spent the hour doing it and got to the end. Also H&R got me about $80 less than turbotax did…. uhhhh……

  13. TurboTax is a piece of junk, and has been since its very inception about 25 years ago. It looks impressive, and has many “bells and whistles”, but it is full of errors and omissions, and its “experts” need to go back to school and learn a bit about basic accounting and tax law.
    Their “guarantee” (plagiarized from that of H&R Block) is equally useless, because — if/when the IRS detects their errors – TurboTax will simply claim that YOU provided the program the wrong information, and they are not responsible. (Read the fine print.)
    For a very simple return consisting only of wages and interest income, it *may* do an adequate job. But you could do the same thing in less time by following the instructions for Form 1040A, and save the ridiculous fee TurboTax charges for their “service”.
    But, if you have a more complicated tax situation, and especially if you have a business, depreciation, interest in a limited partnership or passive activity, or a trust, TurboTax will NOT do your return accurately. You *may* never discover their errors, unless you do the return manually and compare results, or get audited by the IRS — but the return will be inaccurate, and may cost you quite a bit of money (by overstating your income and causing you to pay more taxes than you owe, or understating it and causing you to pay more taxes, penalties and interest down the line, when your return is audited).
    Stay away from “tax preparation software”. Learn how to do your own taxes, or use the services of a competent accountant.

  14. I just added all my data and information to TaxAct (like I have each year for 6 years) and in order to take an itemized deduction, I had to upgrade to the $15 product. The free product is now only if you take the standard deduction. Ridiculous!

  15. I want yo add one thing about tax act I just discovered or had forgotten. The state tax filing fee is $9.99. My daughter, for whom I do her taxes too could have probably done them all online for free. She works in one state and lives at home but has no deductions. Gonna cost me about $40 to e-file using taxact. If did hers online for federal and two states it would probably be free but I’d have to print forms and carry numbers over and enter data several times.

    • Rob Berger

      Cris, thanks for the tip. It often comes down to paying a few bucks for the convenience of using a tax package versus finding the forms and doing it on your own.

  16. The 2016 TaxAct Ultimate Bundle does NOT include State filing. It is another $25 for the State Premium.

    Last year, for itemized deductions and business, I paid $20 for TaxAct. This year, I paid $60.

    • Which is why I will not be using it. I have been using them for the last 4 years and they have never had a price increase like this. It is ridiculous. I have never paid more then $30 for tax software fed and state.

  17. David Hudson

    I used to use TaxAct unit they had 3 price hikes in 2.5 months from $30 in Q4 2016, $40 in January 2017 and $60 on January 30, 2017. Now its just feels like they are trying to take advantage of those who don’t purchase in the later part of the previous year. Years past haven’t been quite this bad but they do this every year. I’m calling it quits.

    • I have been using Taxact for the past 3 years. The price was $13.99 each year because I locked in early. This year it has gone up to $27.99. I might use them this year since I started before I noticed the price increase, but next year I will check out FreeTaxUSA. I might even do them on paper. My taxes aren’t the simplest with a (very) small business and itemizing, but it’s pretty easy if you look at last year’s return and no new situations arise.

  18. Rodger Frego

    I have used Taxact for the last 3 years. I was offered to use it again for free this year but have decided to try FreeTaxUSA as well. It appears Taxact is no longer going to offer free tax forms in the future and will raise their price comparable with Turbotax. I have discovered that the free tax programs are just as good as the costly ones so it doesn’t make sense to pay to file federal taxes. I live in Texas and we have no State tax so that is not an issue for us.

  19. David OBrien

    I have two comments on this article.

    1) The publication date for this is February 1st 2017 and the title is “What Is The Cheapest Tax Software for 2017?”; however, looking in the comments I see questions from 2015. This makes no sense and makes me question if the software you’ve reviewed was actually reviewed for the 2016 tax year or if this is just a recycled article with the year changed.

    2) Creditkarma is offering free tax software. A comparison of this software would have been nice as it’s a new comer to the game and I suspect is playing as a lost-leader for this year. Note, I have no affiliation with creditkarma just looking into using it this year as an alternative to turbotax.

  20. Keith in Buffalo

    Yeah, just did TaxAct (plus, downloaded–I will never trust online). I have been using that for 20 years, from when it used to be TaxCut. I’m furious, I can’t believe they jacked their price up from $30 to $60 this year. Not happy about that, exploring alternatives for next year, as my taxes are really simple. (Unfortunately TaxAct doesn’t seem to still have the Ultimate Bundle, as stated in the article). Paper and stamps is starting to sound more and more appealing!

  21. Nate in Boston

    I’m also upset with taxact for raising their prices. I will switch to another online service. But looks like they have all raised their prices. Not fair! Not cool!

  22. Les N. Close

    I don’t use online tax prep. My financial info is my own business. I’ve used Tax Act mid-level download since the 2008 return, when it was a pretty good deal. For privacy, I always downloaded, then pulled the Ethernet plug out of the back of the computer before installing or starting the program. I need 2 states, and until TY14 the Tax Act total was $30 to $47. For TY15 their price went way up, but I found an online coupon that got me back down to $39. This year Fed and one state is $75 ($60 just a few weeks ago) and an extra state is $38. Worse, the coupons are only good for the online prep now. Heck, at that cost I might as well add some $$ and have a pro do my taxes. I found an HR Block Premium package deal on Amazon for $30 (includes 1 state; extra states are $20). So for my taxes, $50 vs $113. Tough choice, eh? KMA, Tax Act, I’m done.

  23. James Demers

    I switched to H&R Block last year, after the Great TurboTax Ripoff, where they moved features I needed to the most expensive product they had. Good for that year, but for tax year 2016 the software refuses to import local taxes paid, and reported on my W2, to the New York State IT-2. It simply ignores the data that’s there. And if I over-ride the IT-2 and enter the numbers, it refuses to file the return. Nice, given that NY REQUIRES you to e-file.
    Still not sure wtf to do about this – it’s infuriating, and H&R Block’s purely imaginary help and “chat” are just that: non-existent. No links to be found, and the 800 number lets you talk to a computer, which is programmed only to help you buy the product. Huge disappointment.

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