The tax software market size was valued at US$ 20.95 billion in 2022 and is expected to reach US$ 46.90 billion by 2030. The tax software market is estimated to record a CAGR of 10.6% from 2022 to 2030.
Analyst Perspective:
Various players in the tax software market are launching software and services to save their customers' taxes. They are enabled with automation to simplify the sales tax for businesses of all sizes. For instance, in August 2023, Stripe, a financial infrastructure platform for businesses, launched Stripe Tax for platforms, enabling platforms using Stripe Connect to offer Stripe Tax as a service to their customers. Stripe Tax because it’s a logical extension of payment processing, and Stripe has built Tax for platforms so platforms can offer it to their customers and help them with all aspects of the transaction lifecycle. Such product launches are helping to boost the adoption of tax software services globally. In May 2023, the intelligent sales tax solution CereTax, Inc. released a new user interface to simplify the sales tax automation process. Users can manage and automate their sales tax operations, including tax computation, rigorous rules, and in-depth reporting, using the new site, a component of CereTax's cloud-based tax automation platform. All sizes of businesses may function effectively and without hindrance because of the interface's simplicity and usability. Such product launches are helping to boost the adoption of tax software solutions globally.
Tax Software Market Overview:
The tax software platform can be an excellent resource for many taxpayers filing their tax returns. It is designed to make the tax preparation process more efficient and help the average taxpayer to understand the various nuances of tax law. The primary purpose of tax software is to automate the tax return filing process. The tax software has various features, including e-filing, a method that is more secure and reduces errors and processing time. Many tax software programs will store tax returns in the cloud for several years so businesses can access them easily during tax filing.
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Tax Software Market: Strategic Insights
Market Size Value in US$ 20.95 billion in 2022 Market Size Value by US$ 46.90 billion by 2030 Growth rate CAGR of 10.6% from 2022 to 2030 Forecast Period 2022-2030 Base Year 2022
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Tax Software Market: Strategic Insights
| Market Size Value in | US$ 20.95 billion in 2022 |
| Market Size Value by | US$ 46.90 billion by 2030 |
| Growth rate | CAGR of 10.6% from 2022 to 2030 |
| Forecast Period | 2022-2030 |
| Base Year | 2022 |
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Tax Software Market Driver:
Increase in Digitization of Tax Systems Drives Tax Software Growth
The ongoing digital revolution presents enormous scope for businesses—digital services and automation help to modify business models and traditional processes for improving operational efficiencies and revenues. Digital transformation or automation in businesses is characterized by the integration of digital technology in various business processes, organizational activities, and business models. The digitalization of tax systems aids in enhanced operational efficiencies, end-to-end business process optimization, and cost and human error reduction.
Citizens mostly find the process of paying taxes challenging and time-consuming. The tax administration authorities are increasingly undertaking digital transformation and automation of their systems, as monitor tax compliance and collecting sufficient revenue is necessary to finance public goods and services. Digitalized tax systems have the potential to bring successful and sustainable tax reforms, ensure proper taxation, and address compliance-related challenges. Further, the COVID-19 pandemic, which led to a rise in the use of digital commerce, made digital transformation especially urgent for tax administrations. Companies are increasingly embracing tax digitalization to comply with new electronic reporting requirements and enhance the accuracy and efficiency of tax functions. The relevant investments by these companies in tax software technologies continue to rise to improve the ability to gather more tax information and gain more insights into the tax and financial positions of taxpayers. In May 2022, CentralSquare Technologies announced that six municipalities in Ontario, Canada, selected CentralSquare's Property Tax solution to amplify the citizen experience. In addition, in September 2021, the UK government introduced the "Making Tax Digital for Business" policy with an aim to move all business-related tax reporting online.
Tax software quickly analyzes a client's overall financial situation and suggests insurance or investment products. It also provides services such as auditing, bookkeeping, and comprehensive financial plan preparation. The tax preparation process has become faster and more efficient as vast information is now available in digital format, which helps tax preparers directly import their client data from personal finance software in a single click. This has eliminated the need for manual entries. Sage Group plc, Xero Limited, SAP SE, and CloudTax are among the key tax software vendors operating worldwide. Further, mobile apps are available now for taxpayers, which help them effortlessly e-file their taxes. Thus, the continuous digitization of the tax system propels the growth of the tax software market.
Tax Software Market Report Segmentation and Scope:
The tax software market is segmented based on product, deployment type, tax type, end user and geography. Based on components, the global tax software market is segmented into software and service. Based on tax type, the tax software market is bifurcated into sales tax, income tax, corporate tax, and others. Based on end users' type, the tax software market is bifurcated into individual and commercial. Based on enterprise size, the commercial enterprises market is segmented into small, medium, and large enterprises. Based on vertical, the commercial enterprises market is bifurcated into BFSI, government, IT & telecom, healthcare, retail, and others. Regionally, the tax software market is segmented into North America (the US, Canada, and Mexico), Europe (the UK, Germany, France, Italy, Russia, and the Rest of Europe), Asia Pacific (China, Japan, India, Australia, South Korea, and the Rest of Asia Pacific), the Middle East & Africa (South Africa and the Rest of Middle East & Africa) and South America (Brazil, Argentina, and the Rest of SAM).
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Tax Software Market Segmental Analysis:
Based on component, the tax software market is segmented into software and services. The software segment held the largest share in the tax software market in 2022. Along with cumulative digitalization, businesses of all sizes are adopting automated solutions to ease their business process. The advancements in the applications of information, communication, and technology (ICT) are paving the way for efficient businesses. Tax software helps organizations dynamically monitor business activities and deliver alerts while establishing tax duties. The software is in high demand owing to the evolving tax and accounting laws. Enterprises of all sizes require a sophisticated system to follow the current tax filing procedures. Tax software market players across the country are focusing on providing advanced automated software to their end users. Due to rising regulations and complexity in the tax return process, various software providers are launching products that can automate the tax filing process for all enterprises. For instance, in May 2023, in India, Cleartax, a leading fintech SaaS firm, developed a first-of-its-kind cloud software product, Clear Finance Cloud. The new Clear Finance Cloud platform ensures a seamless flow of information across different finance teams of an enterprise, enabling them to automate entire functioning right from vendor onboarding, invoice capture, invoice digitization, GST compliance, and return filing, ITC maximization, vendor payments, as well as vendor financing all facilitated through a connected cloud-based technology platform. Such tax software product launches are helping to flourish the tax software market growth.
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Tax Software Market Regional Analysis:
In 2022, North America held the largest global tax software market share. The region has a mature market when it comes to the adoption of software solutions. For example, according to Employbl Inc., in August 2023, there were over 6,727 software companies across the US. A vast presence of tax software providers, such as Avalara, Sage Group Plc, Thomson Reuters Corp, and Xero Ltd, provide advanced tax software solutions to individuals and businesses to offer them efficient and errorless tax filing processes. Thus, the presence of several leading tax software providers is positively influencing the tax software market growth in North America. Short-workforce businesses are focused on adopting technologies to improve their operations and workflow rather than hiring skilled labor. They are learning to adopt artificial intelligence (AI) solutions. Thus, the growing awareness and popularity of AI solutions among individuals and professionals regarding the benefits of AI fuels the adoption of AI-based tax software solutions. To cater to the demand for AI solutions, the tax software market players are launching several solutions that propel the region's tax software market share. For example, in April 2023, an AI-powered tax software startup launched an AI-driven tax solution in partnership with financial institutions, fintech, and payroll providers, including Mercury Financial, Acorns, B9, and Moves. The solution was launched to help Americans advance in estimating, optimizing, and filing their taxes.
Tax Software Market Key Player Analysis:
Sage Group Plc, Thomson Reuters Corp, Xero Ltd, IRIS Software Group Ltd, Wolters Kluwer NV, Intuit Inc, HRB Digital LLC, Wealthsimple Technologies Inc, SAP SE, and CloudTax Inc are among the key companies operating in the tax software market.
Tax Software Market Recent Developments:
Inorganic and organic strategies such as mergers and acquisitions are highly adopted by companies in the tax software market. A few recent key tax software market developments are listed below:
- In August 2023, Right Networks, a firm that offers intelligent cloud purpose-built for accounting firms and professionals, partnered with Thomson Reuters, a global content and technology company, to offer cloud hosting of its tax and accounting solutions in the US.
- In July 2023, Thomson Reuters announced its plans to invest US$ 100 million per year in artificial intelligence (AI) starting next year, with plans to integrate technology in its tax research and tax preparation systems as well as other areas.
- In May 2022, UK-based business financial platform Tide has announced a partnership with Sage, a cloud business management platform, to offer an integrated banking and account product for Tide members. By connecting Tide’s tools and data to Sage’s new accounting and compliance as a service platform (ACaaS), Tide members will be able to streamline financial and tax compliance processes, such as self-assessment and year-end accounts.
- In July 2023, Thomson Reuters plans to invest US$100 million per year in artificial intelligence starting next year, with plans to integrate the technology in its tax research and tax preparation systems as well as other areas.
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
Product, Tax Type, Deployment Type, End-User, Enterprise Size, Vertical
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
This text is related
to country scope.
Frequently Asked Questions
The North America held the largest market share in 2022, followed by Europe and Asia Pacific.
Asia Pacific is anticipated to grow with the highest CAGR over the forecast period.
The key players, holding majority shares, in tax software market includes Intuit Inc, THOMSON REUTERS, Avalara, Inc., Vertex, Inc. and SAP SE among others.
Rising integration of advanced technologies is the future trend of the tax software market.
Increase in digitization of tax systems and rise in adoption of tax software are the driving factors impacting the tax software market.
The tax software market was valued at US$ 20.95 billion in 2022 and is projected to reach US$ 46.90 billion by 2030; it is expected to grow at a CAGR of 10.6% during 2022–2030.
The List of Companies - Tax Software Market
- Sage Group Plc
- Thomson Reuters Corp
- Xero Ltd
- IRIS Software Group Ltd
- Wolters Kluwer NV
- Intuit Inc
- HRB Digital LLC
- Wealthsimple Technologies Inc
- SAP SE
- CloudTax Inc
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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