How Much Does It Cost to Start a Tax Preparation Business?
Last updated: March 2026
National Average
Low
$3,500
Medium
$10,000
High
$27,000
Start a seasonal or year-round tax preparation business serving individuals and small businesses with federal and state tax filing.
Time to Launch
1-3 months
Profit Margins
40-65%
Break-Even Timeline
1-2 tax seasons
Interactive Cost Calculator
Select a state below to see state-adjusted costs.
Startup Cost Calculator
Tax Preparation Business in Nationally
Budget:
$50
$1,800
$200
$1,500
$3,000
$1,500
$800
$800
$300
Options
Employees:
One-Time Costs
$9,950
Monthly Costs
$0
First Year Total
$9,950
Startup Costs by State
| State | Low | Medium | High | LLC Fee | Sales Tax |
|---|---|---|---|---|---|
| Mississippi | $2,975 | $8,500 | $22,950 | $50 | 7.0% |
| West Virginia | $3,010 | $8,600 | $23,220 | $100 | 6.0% |
| Alabama | $3,080 | $8,800 | $23,760 | $200 | 4.0% |
| Arkansas | $3,115 | $8,900 | $24,030 | $45 | 6.5% |
| Oklahoma | $3,115 | $8,900 | $24,030 | $100 | 4.5% |
| Kansas | $3,150 | $9,000 | $24,300 | $160 | 6.5% |
| Indiana | $3,185 | $9,100 | $24,570 | $95 | 7.0% |
| Iowa | $3,185 | $9,100 | $24,570 | $50 | 6.0% |
| Michigan | $3,185 | $9,100 | $24,570 | $50 | 6.0% |
| Nebraska | $3,185 | $9,100 | $24,570 | $105 | 5.5% |
| Ohio | $3,185 | $9,100 | $24,570 | $99 | 5.8% |
| Kentucky | $3,220 | $9,200 | $24,840 | $40 | 6.0% |
| Louisiana | $3,220 | $9,200 | $24,840 | $100 | 4.5% |
| Missouri | $3,220 | $9,200 | $24,840 | $50 | 4.2% |
| Tennessee | $3,220 | $9,200 | $24,840 | $300 | 7.0% |
| Texas | $3,220 | $9,200 | $24,840 | $300 | 6.3% |
| Georgia | $3,290 | $9,400 | $25,380 | $100 | 4.0% |
| Illinois | $3,325 | $9,500 | $25,650 | $150 | 6.3% |
| New Mexico | $3,325 | $9,500 | $25,650 | $50 | 5.1% |
| Wisconsin | $3,325 | $9,500 | $25,650 | $130 | 5.0% |
| North Carolina | $3,360 | $9,600 | $25,920 | $125 | 4.8% |
| South Carolina | $3,360 | $9,600 | $25,920 | $110 | 6.0% |
| South Dakota | $3,395 | $9,700 | $26,190 | $150 | 4.5% |
| Minnesota | $3,430 | $9,800 | $26,460 | $155 | 6.9% |
| North Dakota | $3,465 | $9,900 | $26,730 | $135 | 5.0% |
| Wyoming | $3,500 | $10,000 | $27,000 | $100 | 4.0% |
| Nevada | $3,570 | $10,200 | $27,540 | $425 | 6.8% |
| Arizona | $3,605 | $10,300 | $27,810 | $50 | 5.6% |
| Florida | $3,605 | $10,300 | $27,810 | $125 | 6.0% |
| Idaho | $3,605 | $10,300 | $27,810 | $100 | 6.0% |
| Pennsylvania | $3,605 | $10,300 | $27,810 | $125 | 6.0% |
| Delaware | $3,640 | $10,400 | $28,080 | $110 | 0.0% |
| Virginia | $3,640 | $10,400 | $28,080 | $100 | 4.3% |
| Colorado | $3,710 | $10,600 | $28,620 | $50 | 2.9% |
| Montana | $3,710 | $10,600 | $28,620 | $70 | 0.0% |
| Utah | $3,710 | $10,600 | $28,620 | $54 | 4.8% |
| Oregon | $3,920 | $11,200 | $30,240 | $100 | 0.0% |
| Vermont | $3,920 | $11,200 | $30,240 | $125 | 6.0% |
| Maine | $3,990 | $11,400 | $30,780 | $175 | 5.5% |
| Rhode Island | $4,060 | $11,600 | $31,320 | $150 | 7.0% |
| New Hampshire | $4,095 | $11,700 | $31,590 | $102 | 0.0% |
| Washington | $4,130 | $11,800 | $31,860 | $200 | 6.5% |
| Connecticut | $4,165 | $11,900 | $32,130 | $120 | 6.3% |
| New Jersey | $4,375 | $12,500 | $33,750 | $125 | 6.6% |
| Alaska | $4,445 | $12,700 | $34,290 | $250 | 0.0% |
| Maryland | $4,515 | $12,900 | $34,830 | $100 | 6.0% |
| California | $4,725 | $13,500 | $36,450 | $70 | 7.3% |
| New York | $4,865 | $13,900 | $37,530 | $200 | 4.0% |
| Massachusetts | $5,250 | $15,000 | $40,500 | $500 | 6.3% |
| Hawaii | $6,755 | $19,300 | $52,110 | $50 | 4.0% |
Cheapest & Most Expensive States
5 Cheapest States
- Mississippi$8,500
- West Virginia$8,600
- Alabama$8,800
- Arkansas$8,900
- Oklahoma$8,900
5 Most Expensive States
- Hawaii$19,300
- Massachusetts$15,000
- New York$13,900
- California$13,500
- Maryland$12,900
Frequently Asked Questions
A tax preparation business can start for $5,000–$15,000, with the main costs being tax software ($600–$1,800/year), PTIN registration ($19.95/year), office equipment ($500–$1,500), and marketing. Home-based operations eliminate office rent entirely.
No — anyone can prepare federal taxes for compensation if they register for a PTIN. However, CPAs, EAs, and attorneys can represent clients before the IRS, charge higher rates, and are subject to continuing education requirements. Oregon and California require state licensing for all paid preparers.
Average fees nationally are $220 for individual returns and $800–$1,500 for business returns. Complex individual returns (rental income, self-employment, investments) command $300–$500+. Your market and credential level determine acceptable pricing.
Tax season runs January 15 – April 15 with an extended September 15 deadline for extensions. Most revenue is earned in 3 months. Successful preparers build year-round income from amended returns, IRS notices, bookkeeping, and payroll services.