Barring unprecedented emergencies like the Covid-19 pandemic, Tax Day has fallen reliably on or around April 15th since 1955. It can feel like the tax-paying process has remained the same since that year, too. Navigating a byzantine hodge-podge of papers and portals, taxpayers are often unsure how much they owe the government and how best to go about minimizing the amount they owe in the future.

What products drive Tax Day today—and what other products might shape its future?

Old-school processes

Despite the rising popularity of e-filing among individual taxpayers, the IRS continues to receive 10% of filings through the mail. The IRS has to sift through more than 13 million individual tax returns in this medium, and millions of returns from businesses, every year—often leading to repetitive and expensive work prone to error.

Moving toward digital filing can help mitigate some of these errors, but the taxpaying process in the US requires a user-experience overhaul writ large. Through a more intuitive and condensed filing process, the US can increase national productivity by reducing the amount of hours spent on taxes while also minimizing the resources the IRS requires for vetting individual returns.

TurboTax

The 90% of individual taxpayers who do file electronically tend to do so through tax-preparing platforms. Intuit-owned TurboTax claims around a 70% market share among taxpayers who self-file, making it almost synonymous with taxes themselves in the US.

Platforms like TurboTax have made filing a speedier experience of tens of millions of taxpayers. More than 100 million taxpayers now receive their tax refunds through direct bank deposits, for instance, helping expedite the process and alleviating cash-flow issues. But no other major economy depends so significantly on private companies to drive tax filing—a basic government function.

With increased funding from the Biden administration, the IRS appears more likely than ever to begin building a comprehensive e-filing solution—not just for those below a certain income level. “There’s no reason in the world that a modern economy shouldn’t have a system that makes it easy for such a large group of taxpayers to file their returns,” Secretary of the Treasury Janet Yellen said in June 2022.

While Intuit claims that increased funding to the IRS is a “nonevent,” it’s also redoubling its lobbying efforts, dispensing around $3.5 million last year to lobbying. “Government funded services that curtail or eliminate the role of taxpayers in preparing their own taxes could potentially have material and adverse revenue implications on us,” it warned shareholders in its 2022 annual report.

How the tax-filing product landscape changes over time could therefore significantly improve individual taxpayers’ experiences, while also posing a threat to incumbent private players.

Crypto compliance

The growth of alternative assets like crypto has seen millions of taxpayers looking to file income earned from new investment vehicles. But regulations have yet to fully catch up, leaving many individual taxpayers to macgyver self-filing products to work for them.

“They don't really have any good regulations out there yet,” says Emery Sheer, a Florida-based accountant. “We have to kind of guess.”

However, a new cohort of crypto tax-filing products are aiming to resolve this issue. Products like Koinly, TaxBit, and CoinLedger strive to fill in the gaps—helping normalize alternative assets while also proving how much simpler the US taxpaying process could be.