Tax Preparation Franchise Statistics: Franchise Share, Seasonality and Paid Preparer Trends

Does the usual story about tax preparation franchises hold?

The common story has three parts: tax preparation is one of the most franchised professional services, it is intensely seasonal, and paid preparers are losing customers to do-it-yourself filing. The first two parts hold. The third does not hold in IRS data, but a related pressure is visible inside franchise systems.

• Highly franchised: supported. In the 2017 Economic Census, tax preparation (NAICS 541213) had the highest franchise share of establishments among 20 professional, scientific and technical services industries (26.7%; next was display advertising at 14.1%) and ranked 16 of 267 industries in total, against a median of 3.2% (Census EC1700FRAN).
• Intensely seasonal: supported, but easing. February employment was 2.19 times August employment in 2025, against 1.07 for CPA offices and 1.02 for all private industries; in 2014 the ratio was 3.90 (BLS QCEW).
• Declining paid-preparer use: not supported. Practitioner e-filed returns rose 32.4% from FY2009 to FY2025 and reached 53.3% of all individual returns, the highest share apart from FY2022 (53.5%) (IRS Data Book 2025). Self-prepared online returns grew faster (121.7%), mostly by replacing paper returns.
• What did decline: franchised outlets. The three largest systems among seven tax FDDs filed in Minnesota (H&R Block, Jackson Hewitt and Liberty Tax) disclosed 21.6% fewer franchised outlets over three years, while company-owned outlets rose 7.2% (Minnesota FDDs).

Tax preparation franchise statistics: how franchised is the trade?

About one in four tax preparation offices with employees operated under a franchise in 2017, and franchise offices earned close to one-third of the industry’s receipts. The share rose between 2007 and 2017, but part of that rise reflects how the Census Bureau edited franchise answers, so the level is more reliable than the trend.

The 2017 Economic Census counted 30,025 U.S. tax preparation establishments with payroll, of which 8,022 were franchise establishments (26.7%). Franchise establishments reported $2.23 billion of the industry’s $7.05 billion in receipts (31.6%) and 47.1% of paid employees in the March pay period (Census EC1700FRAN). In 2007 the franchise share was 21.7% of establishments and 25.3% of receipts; in 2012 it was 21.1% and 22.8% (Census EC1200CFRA1).

Owner type is lopsided. Franchisees owned 7,865 of the 8,022 franchise establishments in 2017; franchisors owned 157 (2.0%). That figure is far below the 6,650 company-owned U.S. offices H&R Block reported at the 2017 peak (H&R Block 10-K, FY2017), which suggests that franchisor-owned offices mostly did not identify themselves as franchise establishments. Census franchise counts for this industry are therefore best read as a lower bound.

Firm-level survey data point the same way at a coarser level. In the Annual Business Survey, 2.3% (standard error 0.2 points) of responding employer firms in NAICS 5412, which combines CPA, tax preparation, bookkeeping and payroll firms, operated all or part of the business as a franchise in 2023 (2024 ABS), against 4.7% for all sectors; those franchise firms held 12.2% of the industry group’s employment (Census ABS AB2300CSCB01). The ABS cannot isolate tax preparation, and its 2019 table stops at 3-digit industries.

Most tax preparers have no employees at all. Census Nonemployer Statistics counted 93,523 nonemployer tax preparation businesses in 2017 with $2.37 billion in receipts (Census NES 2017). Counting them, franchise establishments were 6.5% of tax preparation businesses but 23.6% of receipts.

Franchise vs independent tax offices: size

Franchise tax offices are larger than other tax offices on every Census measure, and the gap widened in 2017. Because the non-franchise group also contains offices that skipped the franchise question, treat the ratios as approximate.

In 2017 a U.S. franchise tax preparation establishment reported $278K in receipts on average, against $219K for non-franchise establishments, a ratio of 1.27. The ratio was 1.22 in 2007 and 1.10 in 2012. Franchise establishments had 10.0 paid employees on average in the March 2017 pay period, against 4.1 for non-franchise establishments (2.44 times) (Census). These are receipts, not profits, and say nothing about what an owner keeps.

The franchise and non-franchise groups are not like for like. Non-franchise tax offices include many small practices, while franchise offices are often storefronts staffed for the filing season. Nonemployer preparers averaged $25K in receipts in 2017 (Census NES). See franchise vs independent business for the same comparison across all industries.

How seasonal is a tax preparation business?

Very seasonal, but less than it was. Tax preparation employment more than doubles between late summer and February, while CPA offices and the private economy as a whole barely move. The peak has shrunk since 2014 while off-season employment has grown.

BLS Quarterly Census of Employment and Wages data show U.S. private tax preparation employment of 133,392 in January 2025, 147,055 in February and 141,036 in April, then 77,344 in May and a low of 67,075 in August (BLS QCEW). The peak-to-trough ratio of 2.19 compares with 1.07 for offices of certified public accountants and 1.02 for all private industries. The first quarter carried 28.0% of the industry’s 2025 wages.

The cycle is flattening. From 2014 to 2025 the February peak fell 22.6% (from 189,882 to 147,055) while the August low rose 37.9% (from 48,637 to 67,075), and the ratio fell from 3.90 to 2.19. QCEW does not identify franchises, but company data show the same pattern: H&R Block employed about 73,400 people at its FY2026 peak against about 4,600 regular full-time associates (H&R Block 10-K). FDDs build the season into fees: Toro Taxes defines its tax season as January 1 to April 30 and sets a $5,000 minimum royalty per tax season (Toro Taxes FDD).

Are fewer people using paid tax preparers? What IRS data show

No. The number of returns e-filed by paid practitioners has grown, and their share of all individual returns is higher than in FY2009. What has fallen is their share of electronic returns, because self-prepared online filing grew faster as paper returns disappeared.

The IRS Data Book counts 86,696,461 individual returns e-filed by practitioners in FY2025, out of 162,754,810 individual returns filed (53.3%). In FY2009 practitioners e-filed 65,457,971 returns, 45.4% of 144,103,375 (IRS Data Book 2009). Over the same years self-prepared online returns grew from 29,672,655 to 65,771,253 (+121.7%) and paper returns fell from 48,972,749 to 10,287,096. As a result, practitioners’ share of e-filed returns fell from 68.8% to 56.9% (IRS Data Book 2025).

Since FY2013 the practitioner share of all returns has moved in a narrow band (52.7% in FY2013, 50.0% in FY2021, 53.3% in FY2025). GAO, citing IRS data, put paid-preparer use at 85 million taxpayers (57%) in FY2024 (GAO-26-108723), consistent with the 56.8% practitioner share of e-filed returns that year. Paid paper returns are not separated in the Data Book, so practitioner e-filed returns understate paid preparation slightly.

The 2026 season started the same way. Through May 8, 2026, tax professionals e-filed 75,316,000 returns (+0.6% on the same point in 2025) and self-prepared filers 65,730,000 (+1.7%), leaving professionals with 53.4% of e-filed returns (IRS filing season statistics). Government free filing remains small: IRS Free File handled 3,187,642 returns and Direct File 308,628 in FY2025, and Direct File was suspended (Treasury report to Congress, October 2025) after 751,000 registrations against an IRS estimate of 32 million eligible taxpayers (TIGTA 2026-408-006).

How many paid tax preparers are there?

The IRS counted 886,338 individuals with a current Preparer Tax Identification Number (PTIN) as of September 1, 2026, up 5.4% from 840,554 a year earlier and 27.6% from 694,520 on September 2, 2014 (IRS preparer statistics). Anyone paid to prepare a federal return must have a PTIN, but holding one does not mean a person prepares many returns.

Credentials cover a minority. The 2026 count includes 209,076 CPAs, 71,966 enrolled agents and 26,256 attorneys, and 72,049 people completed the voluntary Annual Filing Season Program. GAO counted 295,751 credentialed practitioners in December 2025; set against 870,679 PTIN holders that month, about 66.0% of PTIN holders had no CPA, attorney or enrolled-agent credential (GAO-26-108723). Most PTIN holders are therefore unenrolled preparers, the group the voluntary Annual Filing Season Program is designed to reach.

What public filings show: company-owned vs franchised tax offices

H&R Block has shifted its office mix from franchised toward company-owned offices since at least fiscal 2015, and the shift continued over the last three fiscal years.

H&R Block reported 6,802 company-owned and 1,814 franchise offices as of March 31, 2026, against 6,643 and 2,168 as of March 31, 2024 (H&R Block 10-K, FY2026). Franchise offices fell by 354 (-16.3%) and company-owned offices rose by 159, taking the franchise share from 24.6% to 21.1%. The company says lower franchise return volumes were “primarily driven by franchise acquisitions”. Its total assisted return volume changed -3.2% in FY2023, -1.3% in FY2024, -0.9% in FY2025 and -0.1% in FY2026. U.S. franchisees pay about 30% of gross tax preparation revenue as royalty, as stated in the 10-K.

Over a longer span, H&R Block’s franchise offices fell from 3,921 at the FY2015 peak to 1,814 (-53.7%), while company-owned offices changed +6.9%. Count dates moved from peak season to March 31 over this period, and the FY2024 to FY2026 counts are stated without a country label, though their size matches the U.S.-only counts in earlier 10-Ks.

Liberty Tax, which filed its own 10-Ks through fiscal 2019, reported 4,069 U.S. offices in FY2015 and 2,836 in FY2019 (-30.3%), with returns filed in U.S. offices down 30.0% (Liberty Tax 10-K, FY2019). Franchise Group’s 10-K for fiscal 2020 described about 2,490 franchised and 204 company-owned locations in fiscal 2020 (Franchise Group 10-K). For unit growth across all listed franchisors, see public franchisor unit growth.

What tax preparation franchise FDDs show

Seven tax preparation and small-business tax franchisors had current FDDs on file in Minnesota in 2026. Their Item 20 tables confirm the shift seen in H&R Block’s 10-K, and their Item 7 estimates put entry costs well below the typical franchise.

Across H&R Block, Jackson Hewitt and Liberty Tax, franchised outlets fell from 7,422 to 5,821 (-21.6%) over each system’s last three fiscal years, while company-owned outlets rose from 8,891 to 9,527 (+7.2%). The franchised share of their combined outlets fell from 45.5% to 37.9% (H&R Block FDD, Jackson Hewitt FDD, Liberty Tax FDD). The smaller systems moved the other way: ATAX went from 98 to 111 franchised outlets and Toro Taxes from 183 to 192.

The median total initial investment across the seven FDDs runs from $49,700 to $89,700, and the median initial franchise fee is $35,000. For comparison, the median Item 7 range in the site’s 259-FDD sample is $265,372 to $573,000 (see franchise initial investment). Ongoing fees are set as a share of revenue: Liberty Tax charges a 14% royalty plus a 5% advertising fee, Jackson Hewitt’s royalty steps from 3% in the first reporting year to 15% from the fourth, plus a 6.5% advertising fee, and H&R Block’s royalty is 60% of the first $5,000 of annual revenue and 40% above that. Cross-sector royalty data are in franchise royalty rates.

How tax preparation businesses borrow: SBA loans

SBA lending to tax preparers is small and mostly goes to independents. From FY2010 to June 30, 2026, lenders approved 2,675 SBA 7(a) loans to tax preparation businesses, of which 335 (12.5%) carried a franchise code (SBA 7(a) FOIA). Franchise-coded loans were 19.5% of the total in FY2010 to FY2019 and 13.5% in FY2020 to FY2022. The share then fell to 1.8% in FY2024, which mainly reflects the SBA’s 2023 decision to stop publishing its Franchise Directory (Federal Register), reversed in 2025 (SBA), not a change in borrowers.

The median franchise-coded loan was $127,000 against $80,000 for other tax preparation loans. Liberty Tax (158 loans), Jackson Hewitt (87) and H&R Block (73) account for most franchise-coded loans. Of loans approved FY2010 to FY2019, 5.1% of franchise-coded and 8.3% of other tax preparation loans had been charged off by June 30, 2026, on small counts. More on SBA lending is in SBA franchise loans.

What to check before buying a tax preparation franchise

The data above suggest a short list of checks. None of them replaces reading the full FDD with a franchise lawyer and an accountant.

• Item 20, both tables. At H&R Block, Jackson Hewitt and Liberty Tax, franchised outlets fell 21.6% while company-owned outlets rose. Ask how many offices the franchisor bought back, from whom, and on what terms.
• Minimum royalties against a short season. Fees such as Toro Taxes’ $5,000 minimum per tax season or Liberty Tax’s $5,000 to $11,000 annual minimums in years two to five are owed whatever the season brings.
• Cash for eight slow months. Employment in the industry falls from 147,055 in February to 67,075 in August (2025). Item 7 additional-funds lines cover a stated opening period; Toro Taxes estimates $3,000 to $9,000 for the first three months.
• Staffing. About 66.0% of PTIN holders hold no CPA, attorney or enrolled-agent credential; check the franchisor’s training and the Annual Filing Season Program requirement.
• Item 19. Read any financial performance representation in full; this report does not summarize one. See how Item 19 works and what franchises cost.

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