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Cheapest Software to File Taxes Online

If you’re looking to find the best deal on tax filing software, you’ve come to the right place. Let me first explain how the pricing models for most tax companies work.
Updated: November 14, 2022 | Max Fay

Home > Taxes > Cheapest Software to File Taxes Online

When it comes to picking an online tax software, you would think price would be the decisive factor. Yet, Free File by the IRS has been around since 2003, and of the 70 percent of tax payers that qualify, only about 3% take advantage of this free tax filing system.

You might be able to blame those numbers on marketing campaigns from TurboTax or H&R Block, but hey, you’ve outsmarted them this year!

Traditionally, online tax software packages have come in four categories:

  1. Free – Typically, the free version only covers simple returns that input your W-2 information and send your return.
  2. Deluxe – The Deluxe package allowed tax filers to itemize deductions and apply credits. However, the Tax Cuts and Jobs Act of 2017 doubled the standard deduction, eliminating the need to itemize for over 90% of taxpayers. The new law rendered the “Deluxe” package useless and most companies have eliminated it from its offerings.
  3. Premium – The Premium (or Premier) package was marketed toward taxpayers with investment or rental property income.
  4. Self-Employed – The Self-Employed package, the most expensive bundle, was designed for independent contractors and freelancers.
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    Top Software to File Taxes Online

    TurboTax has dominated the tax filing industry using this model, but more recently, an arms race has developed over the free filing option. Credit Karma entered the game in 2016 and turned the tax filing system on its head by offering completely free filing for nearly every major tax situation.

    For comparison purposes, here is a list of the eight most popular online tax filing softwares ordered by price.

    Credit Karma logo

    Credit Karma

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    Free Version: $0/federal; $0/state

    • W-2 income
    • Investment income
    • Rental income
    • 1099 income and expenses
    • Itemized deductions

    No Additional Packages
    Credit Karma offers comprehensive tax filing for free.

    Notes:
    Credit Karma came on the scene in 2016, and has improved its software each year. Its free version will cover nearly every major tax filing situation – but not all situations. So, be sure to check this list of forms that are not supported.

    User Experience:

    • Clean Modern Design
    • Simple to Use
    Tax Hawk logo

    Tax Hawk (FreeTaxUSA)

    Visit Site

    Free Version: $0/federal; $15/state

    • W-2 income
    • Investment income
    • Rental income
    • 1099 income and expenses
    • Itemized deductions

    Additional Packages Deluxe: $7

    • Priority Support
    • Unlimited Amendments
    • Audit Assist
    Notes:
    Tax Hawk also owns and operates FreeTaxUSA. It remains a popular choice for tax bargain hunters. While the software is dated, it is simple to navigate. The software does lack many of the guided features and extras you might find with H&R Block or TurboTax.

    User Experience:

    • Dated
    • Lack of Features
    Tax Slayer logo

    Tax Slayer

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    Free Version: $0/federal; $0/state

    • W-2 income
    • Earned income credit
    • Child care expenses
    • Student loan interest
    • Retirement plan income
    • Social Security income
    • Child tax credit

    Additional Packages: 

    • Classic: $17/federal
    • Premium: $37/federal
    • Self-Employed: $47/federal

    Upgraded state filing: $39

    Notes:
    Tax Slayer offers free filing for both federal and state taxes with simple returns. They offer a quick file option that streamlines the process cutting out a lot of the irrelevant questions.

    User Experience:

    • Smart Features
    • Modern Design
    • Quick File Option
    Tax Act logo

    Tax Act

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    Free Version: $0/federal; $0/state

    • W-2 income
    • Earned income credit
    • Dependents
    • Earned income credit
    • Current students
    • Retirement income
    • Child tax credit

    Additional Packages: 

    • Deluxe+: $40/federal; $45/state
    • Premier+: $60/federal; $45/state
    • Self-Employed: $90/federal; $50/state
    Notes:
    Tax Act isn’t cheap enough to be called a bargain, and the user experience isn’t good enough to call it a premium service. On top of that, Tax Act aggressively tries to steer you toward its more expensive offerings as you attempt to file a free return.

    User Experience:

    • Dated
    • Lacking Features
    • Less Guided Navigation
    Jackson Hewitt logo

    Jackson Hewitt

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    Free Version: $0/federal; $0/state

    • W-2 income
    • Earned income credit
    • Standard deduction

    Additional Packages: 

    • Deluxe: $50/federal; $45/state
    • Premier: $70/federal; $45/state
    Notes:
    Jackson Hewitt made a name for itself with its physical locations, 3,000 of which are conveniently located inside Walmart stores. It’s online software is expensive by comparison and lacks many of the features you would expect for this price point.

    User Experience:

    • Dated Design
    • Limited Functionality
    H&R Block logo

    H&R Block

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    Free Version: $0/federal; $0/state

    • W-2 income
    • Earned income tax credit
    • Child care expenses
    • Student loan interest
    • Retirement plan income
    • Social Security income
    • Child tax credit

    Additional Packages: 

    • Deluxe: $50/federal; $45/state
    • Premier: $70/federal; $45/state
    • Self-Employed: $105/federal; $45/state
    Notes:
    H&R Block supports a lot of forms in its free version, and the software is very well designed. It comes with a lot of features to make filing faster and easier such as the ability to upload the previous year’s return and uploading W-2 information by image or pdf. They also operate 12,000 brick and mortar locations across the U.S.

    User Experience:

    • Smart Features
    • Simple to Use
    • Modern Design
    • Lots of Functionality
    • Guided Navigation
    Turbo Tax logo

    TurboTax

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    Free Version: $0/federal; $0/state

    • W-2 income
    • Earned income tax credit
    • Limited interest and dividend income from (1099-INT or 1099-DIV)
    • Standard deduction
    • Child tax credit

    Additional Packages: 

    • Deluxe: $60/federal; $50/state
    • Premier: $90/federal; $50/state
    • Self-Employed: $120/federal; $50/state
    Notes:
    TurboTax integrates with QuickBooks, so if you are planning to itemize deductions over taking the standard deduction, TurboTax will certainly make it easier. The tax software is simple to use, especially if you are new to filing taxes.

    User Experience:

    • Modern Design
    • Simple to Use
    • Guided Navigation
    • Some Functionality
    Liberty Tax logo

    Liberty Tax

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    Free Version: $45/federal; $40/state

    • W-2 income
    • Earned income tax credit

    Additional Packages: 

    • Deluxe: $65/federal; $40/state
    • Premier: $90/federal; $40/state
    Notes:
    Liberty Tax comes in as the most expensive offering on our list. You may recognize them from their sign-spinning statue of liberty curbside advertising. As far as the tax software is concerned, there are much better choices for much cheaper.

    User Experience:

    • Dated Design
    • Guided Navigation
    • Limited Functionality
    • Some Functionality

    Sources:

    1. Jackson, Tom (2019, April 18) Credit Counseling. Retrieved from https://www.incharge.org/debt-relief/credit-counseling/
    2. NFCC (2016, November 8) Member Quality Standards. Retrieved from https://www.nfcc.org/about-us/membership/