What is the market for income tax software in the US?

What is the market for income tax software in the US

Clarifying Questions

By market do you mean potential users or market size in dollars?  I’ll assume $ - we will get to potential users along the way.

Tax software – can I assume this id personal and not business?  I hope so – or this just way hard.

Tax software can I assume you means software like turbo tax not accounting software like quicken?  Yes

Base formula

Population -> Households -> minus those that don’t pay tax -> minus those that use an accountant -> minus those that use a free service - > minus those that self file -> multiplied by average cost of the software. 

Population of US 330,000,000

Households 330,000,000 /2.5 = 132,000,000 households

68% of a population falls within one standard deviation

Top 16% 21,120,000 - much more likely to use an accountant – continuing down the path of using empirical rule lets say that only those outside of one standard deviation use tax software and only on one side.  So 16% of this population 3,379,200

Middle 16% 89,760,000  I’m going to use 1 side of a standard deviation 34% use tax software the rest will self file, use an accountant, use free filing software, or not pay taxes.  30,518,400

Bottom 16% 21,120,000 – much more likely to not file, self-file,  or use a free service. Again, lets say only 16% use tax software 3,379,200

Tax software costs 40 at a base and goes upto 100 for the advanced versions.  As we get the pricing point  I remember that there is a surcharge for  state taxes.  – should I include the state filing or not – sorry for the late clarifying question.  I’m going to use 20 bucks as a surcharge and assume that most people do both.  I’ll use something like 80% to account for those that don’t and those that live in tax free states.   I’ll just crunch both

At the top end I’ll assume that 90% of those users use the expense version.  So

(3,379,200*.9)*100 =304,128,100

(3,379,200*.1)*40= 13,516,800

In the middle I’m going to assume a 50% split on the cheap vs expensive version

15,259,200 *40 = 610,368,000

15,259,200*100 = 1,525920,000

At the bottom I’m going assume the reverse of the top so 90% use the cheap version

(3,379,200*.9)*40= 121,651,200

(3,379,200*.1)*100= 33,792,000

Total Users = 37,276,800

Total Federal dollar 2,475,559,680

Total state dollars = 37,276,800*.8*20 = 596,428,800

Total dollars = 3 billion and change. (3,071,988,480)

Actual is 3.7 billion according to IBIS World