Operators in the Tax Preparation Software Developers industry provide software that enables individuals and small businesses to file federal and state tax returns online, often following an automated step-by-step guide.
Due to the necessary nature of filing taxes each year, industry revenue is generally steady.
Further, operators have encountered rising demand over the five years to 2020, as more personal and business filers became comfortable using software programs.
According to the 2020 Tax Returns Study by the National Retail Federation, the share of consumers self-filing with computer software will total 37.0% this year, while more than 70.0% will file online altogether.
This has enabled the industry to outpace growth in demand for other tax-filing services.
Overall, industry revenue has risen at an annualized rate of 5.9% over the five years to 2020 to $3.3 billion, including anticipated growth of 2.5% in 2020.
The COVID-19 (coronavirus) pandemic has prompted the Internal Revenue Service to extend the deadline for personal tax filings and constrained the US economy, including lower private investment in computers and software.
This is likely to constrain industry revenue growth this year.