Tax Preparer Salary Guide

Projections Central data indicates that demand for tax preparers could increase by as much as 37.3% from 2020-2030 in some states.

As a career path, tax preparers often thrive due to the complex nature of the U.S. business and personal tax landscape. Companies must comply with all regulations to avoid penalties. Individual taxpayers also need to ensure they have paid all due taxes to avoid audits or scrutiny from the Internal Revenue Service (IRS).

This guide answers the question, "How much do tax preparers make?" Topics include tax preparer salary trends from multiple perspectives, including education, experience, location, industry, and more.

How Much Do Tax Preparers Make?

As of May 2021, the U.S. Bureau of Labor Statistics (BLS) reported the average annual earnings of a tax preparer at just over $51,000 per year. Payscale data from September 2022 put the average slightly lower, at about $48,710 per year.

Payscale also tracks data related to supplemental forms of income, including performance bonuses, profit-sharing agreements, and commissions. According to Payscale, these income sources can add about $1,800 to a combined $48,000 per year to a tax preparer's earnings.

Payscale also tracks salary ranges — tax preparers at the 10th percentile had base earnings of just $24,000 per year. Meanwhile, professionals at the 90th percentile commanded base salaries of $73,000 per year.

These statistics indicate unusually high levels of variance in a tax preparer's earning power.

Tax Preparer Average Salary by Education

A professional can follow multiple paths to become a tax preparer. Tax preparers do not need to meet any firm educational or certification requirements. Many tax preparers come from academic backgrounds in accounting or finance.

Tax preparers who earn compensation for their work on federal tax returns require a preparer tax identification number (PTIN) from the IRS. Enrolled agents must also hold a valid PTIN, making them eligible to perform tax preparation work for their clients.

Their familiarity with tax code regulations must include:

• A deep understanding of filing practices
• Full knowledge of federal, state, and local tax deductions, rebates, and credits
• Up-to-date insights into tax code changes and how they apply to individual cases

The table below summarizes the average pay rates associated with the credentials tax preparers commonly hold:

Salary by Experience

Experienced tax preparers benefit from the knowledge and insights they accumulate over their careers. Increased experience can elevate their job performance and lead to higher pay. Skilled tax preparers who help their clients realize significant savings they might otherwise have missed may also qualify for valuable bonuses.

The following table includes the average base salaries earned by tax preparers at various stages of their careers, based on user-submitted reports. Note that median base salaries tend to peak during the midcareer phase. However, 90th percentile base salaries are higher at the experienced and late-career stages than at the midcareer level.

Salary by Location

Employers with operations spanning wide geographic areas often use a concept known as location-based pay to set salaries. Location-based strategies pay workers higher or lower salaries for comparable work. Employees living in areas with higher living costs earn more, while individuals in more affordable areas earn less.

This concept highlights broader trends across the wider labor market. Employers whose team members live in higher-cost areas tend to pay a salary premium. The opposite tends to be true for employees residing in lower-cost locations.

Local labor market conditions can also play a role in setting tax preparer incomes. When demand for qualified tax preparers is higher in a concentrated area, salaries tend to rise. This reflects increased competition among employers to secure the best people from the available talent pool.

The following tables summarize the top-paying states and metropolitan areas for tax preparers, according to BLS data:

Source: BLS

Source: BLS

Where Should I Work as a Tax Preparer?

During the 2021-2031 timeframe, the BLS anticipates labor market demand for tax preparers to keep pace with the general average for all professions:

However, the BLS only covers the tax preparer occupation in limited detail. For additional insights, you may also consider BLS projections for similar occupations over the same timeline.

These include:

• Accountants and auditors: +6% projected employment growth
• Bookkeeping, accounting, and auditing clerks: -5% projected employment decline
• Tax examiners and collectors: -7% projected employment decline

Projections Central is an initiative funded by the U.S. Department of Labor with technical support from the BLS. According to Projections Central's national outlook for 2020-2030, the U.S. labor market will see a modest increase of 1.6% for tax preparer employment.

At the same time, Projections Central anticipates much higher growth rates in some regions of the country. The tables in the following section provide additional insight.

Best Areas

Tax preparers assist businesses and individual taxpayers throughout the nation. However, their highest employment numbers belong to states with large populations, leading regional economies, and a strong corporate presence.

The continued trend toward hybrid and remote employment may affect the tax preparation field. Tax preparers can capably serve clients over the internet, opening up a broader set of living possibilities and customers. However, they may need to invest extra resources in information security as remote arrangements require clients to send their sensitive financial data online.

Source: BLS

Projections Central predicts that in some areas, demand for tax preparers will vastly exceed the BLS's quoted national growth rate of +4% for 2021-2031. For instance, Projections Central expects the Utah labor market for tax preparers to soar by more than 37% from 2020-2030. Massive gains are also projected for Colorado, Wyoming, Massachusetts, Florida, and several other states.

Source: Projections Central

In terms of cities, the nation's largest metro areas rank among the employment leaders for tax preparers. Note the strong labor market demand in the Washington, D.C., area, which has a very high concentration of federal government agencies.

Source: BLS

Best Industries

As of 2021, the BLS estimates the total number of tax preparers working in the United States at 83,190 professionals. Of those individuals, more than 79,000 work for accounting, tax prep, bookkeeping, and payroll services. That represents about 95% of all tax preparers nationwide.

Most of the remaining tax preparers work for consulting firms or services. As an alternative, experienced tax preparation professionals with established clients sometimes can also opt for independent self-employment.

The following table summarizes the average tax preparer salary by industry, with an emphasis on the five top-paying sectors. Note the relatively small numbers of tax prep professionals in these industries. This trend signals intense competition for a limited number of jobs.

Source: BLS

Of the five top-employing industries, tax preparer salary levels are the lowest in the largest industry category. This figure reflect supply-and-demand trends — a high presence of a certain skill in a particular labor market tends to suppress wages.

Source: BLS

Questions About Tax Preparer Income

How much does a tax preparer make?

In 2021, the BLS reported an average tax preparer salary of $51,080 per year. In September 2022, Payscale quoted a slightly lower average base salary of about $48,710 per year. However, Payscale also reports that bonuses can significantly increase that figure.

What are the highest-paying tax preparer jobs?

According to Payscale, tax preparers at the 90th percentile earn average base salaries of $73,000 per year.

Where is the best state to work as a tax preparer?

Tax preparer salary levels are highest in Alaska, Colorado, Massachusetts, California, and Texas. Projections Central expects the highest employment growth rates from 2020-2030 in Utah, Colorado, Wyoming, Massachusetts, and Florida.

What is the best industry to work in as a tax preparer?

As of 2021, more than 95% of U.S. tax preparers work for companies that provide accounting, payroll, bookkeeping, and tax prep services. However, industries such as enterprise management, legal services, and insurance pay higher average salaries.

Is tax preparation a good career?

Many businesses and individuals require assistance completing their tax returns, regardless of the prevailing economic or labor market conditions. These factors combine to create stable prospects for qualified tax preparers.