You know that to be a successful tax preparer you need to have an entrepreneurial spirit. The tax preparer salary ebbs and flows with the season, your location, and your ability to identify an opportunity when it arises.
To counter these obstacles, you must have a plan.
Let’s take a deep dive into the ins and outs of the tax preparer salary. Do your earnings exceed the average, and can you adjust to improve your income and grow your business? Learn about the competitive landscape, occupational outlook, and product diversification, which are all factors that can impact the tax preparer’s salary.
How Much Money Do Tax Preparers Make?
Whether you’ve just begun your career as a tax preparer, or you’ve been in the industry for a while, understanding average salaries in the trade can help you benchmark your current earnings.
According to Bureau of Labor Statistics (BLS) data, how much money you can make as a tax preparer can vary based on a number of factors like geographic location, experience, and competition within your area.
Generally speaking, wages can be broken down, across the entire U.S. in percentiles. The lowest 10% of tax preparers earn an average of $9.70 per hour, or $20,170 annually. The highest 90% of tax preparers earn $39.30 per hour, or $81,740 annually.
Where are the Best States for Tax Preparers?
You can break down earnings even more specifically by crunching the numbers.
After analyzing the BLS annual mean wage for tax preparers, by state, and comparing the outcomes to cost of living data, CRC has identified the five best states for tax preparers based on salary:
1. Texas
- Annual Median Salary: $50,120
- Cost of Living Rank: 11th
- Annual Median Salary: $46,340
- Cost of Living Rank: 5th
- Annual Median Salary: $46,890
- Cost of Living Rank: 14th
- Annual Median Salary: $41,930
- Cost of Living Rank: 3rd
- Annual Median Salary: $49,860
- Cost of Living Rank: 22nd
Which are the Most Challenging States for Tax Preparers?
On the flip side, these five states are the lowest paying areas for tax preparers.
1. South Carolina
- Annual Median Salary: $34,260
- Cost of Living Rank: 28th
2. Washington
- Annual Median Salary: $38,070
- Cost of Living Rank: 37th
3. West Virginia
- Annual Median Salary: $32,200
- Cost of Living Rank: 23rd
4. Virginia
- Annual Median Salary: $37,770
- Cost of Living Rank: 33rd
5. New Hampshire
- Annual Median Salary: $39,670
- Cost of Living Rank: 39th
You can view the entire data set here.
How Competitive Is It to Become a Tax Preparer?
According to the BLS, the growth rate of tax preparers is about 11%, which is faster than the average occupation in the United States.
As of 2016, the most recent data, there were 95,900 tax preparers in the United States.
The states with the highest employment rate of tax preparer employment are:
1. California
2. Texas
3. Illinois
4. Florida
5. New York
It’s interesting to note that Texas is both a top state to be a tax preparer in, and also a state that touts a high employment rate.
Which States Have the Highest Number of Tax Preparers?
With the growth of the industry above average, CRC analyzed which states have the highest concentration of tax preparers:
1. Oklahoma
2. Alaska
3. South Dakota
4. Idaho
5. Louisiana
If you’re located in an area which has high competition, diversifying your product offerings is a wise strategy for growing your business.
When do Tax Preparers Make the Most Money?
A tax preparer’s income is cyclical. As you would assume from the job description, tax preparers are busiest between January 1 and April 15—tax season. Some U.S. workers also file and pay quarterly taxes, which can account for sporadic business during the off-season, but this may not be enough.
Most tax professionals diversify their offerings so they can make money year-round.
How Tax Preparers Make Money During Lean Months?
In case you are wondering, tax preparers make good money, it turns out that there are great opportunities to earn more during the off season. We’ve discovered that tax preparers are well-suited to incorporate a credit repair business into their service offerings to pad the lean, off-season months.
It’s a natural fit
Clients have already shared confidential financial data with their tax preparers. And tax preparers have already earned the trust of their clients. When tax preparers introduce credit repair as an additional financial services product, not only are they adding value to their existing client base, they are also adding an additional revenue stream for themselves.
