Free vs paid tax filing: what actually differs
For most filers the free paths and a paid product produce the same filed return and the same refund. The difference is guidance, support, and form breadth, not accuracy. This page lays out exactly what free covers, what paid adds, and how to tell which your return needs. We do not name or rank any commercial product.
The short answer
Free and paid tax filing apply the same tax law to the same numbers, so the refund is identical. Paid software sells convenience: a guided interview, prior-year import, broader form support, and customer support. If your return is simple and your AGI is at or below $89,000, a free path does the same job for $0. Paid is worth it mainly when a complex return would take longer to file by hand than the fee saves.
Side by side
The comparison below is between the free government-backed paths as a group and commercial paid software as a group. Individual products vary, so treat each row as the typical case.
| Dimension | Free paths | Paid software |
|---|---|---|
| Cost to file federal | $0 | Priced by complexity |
| The refund itself | Same | Same |
| Guided interview | Yes for Free File and MilTax; no for Fillable Forms | Yes, usually deeper |
| AGI limit | $89,000 for guided Free File; none for Fillable Forms, MilTax | None |
| Complex forms (K-1, multi-state, depreciation) | Per partner; Fillable Forms supports all, manually | Broad, with interview help |
| State return | Free via state portal or some partners; else $15-$40 | Usually an added fee |
| Prior-year import | Re-key manually | Yes, sometimes paid |
| Live support / audit extras | VITA review free; phone help for MilTax | Offered, often paid add-ons |
| Mid-return upsell | Barred inside IRS Free File flow | Common on commercial free editions |
Sources: IRS.gov (Free File program rules, Fillable Forms, VITA/TCE), Military OneSource (MilTax), state Department of Revenue pages.
What free actually gets you
Free filing is not a stripped-down version of a paid product. For a return inside its scope it is the same filed return. The government-backed free paths are:
- IRS Free File guided software through 8 IRS-vetted partners for AGI at or below $89,000. A genuine interview-driven product, free, no upsell inside the flow. Full guide.
- Free File Fillable Forms electronic 1040 forms with no income limit and no guidance. The federal-only option above the AGI ceiling. Full guide.
- MilTax for military filers: no income limit, federal plus up to 5 state returns, free phone support. Full guide.
- VITA and TCE volunteer preparation for households around $67,000 or less and filers 60+. Returns are reviewed before filing. Full guide.
What paid software adds
Paid products compete on convenience and reassurance rather than on the return itself. The four things a fee typically buys:
- A deeper guided interview. More questions, more situation-specific prompts, and inline explanations. Valuable when you are unsure what applies to you and want the software to surface it.
- Broader, smoother complex-form handling. Multiple K-1s, rental schedules, depreciation, and many investment lots are handled with interview help rather than manual form entry.
- Import and carryover. Prior-year data, W-2 imports, and brokerage downloads that cut data entry, sometimes behind a paid tier.
- Support and extras. Live help, expert review, and audit-defence products. Useful for some filers; rarely required for a simple return, and worth reading line by line at checkout.
None of these change the refund. They change how much of your time and attention filing demands. For more on add-ons that turn a free product paid, see when "free" isn't free.
Free federal vs free state
A common point of confusion: a product can be genuinely free for federal and still charge for state. The reason is structural. The IRS subsidises federal Free File through its agreement with partners; state Departments of Revenue do not, so the partner's state economics look like a normal commercial product and a $15 to $40 state fee often appears.
Three ways to keep state free: use a Free File partner that includes free state for your state, file state directly through a state-run portal (CalFile, myPATH, MassTaxConnect and others are free with no income limit), or paper-file the state return. The state-by-state map shows the free path for every state and DC.
How to decide
Work down this list; stop at the first one that fits.
- Military? MilTax is free, no income limit, and built for military situations. Start there.
- Want a person to prepare it, income around $67,000 or less? VITA is free and reviewed.
- AGI at or below $89,000 and a fairly standard return? IRS Free File is the free guided-software path; paying adds little.
- Above $89,000 but comfortable with forms? Free File Fillable Forms keeps it free. Above-the-threshold options.
- Genuinely complex return and short on time? A paid product's interview and import may save more hours than the fee costs. That is the one case where paying is the rational choice.
Frequently asked
What is the difference between free and paid tax filing?
Free tax filing means preparing and electronically filing a return at no cost, through an IRS or government-backed path such as IRS Free File (AGI up to $89,000), Free File Fillable Forms, MilTax, or VITA. Paid tax filing is a commercial product you buy, typically priced by return complexity, that adds a guided interview, broader form support, customer support, and paid extras such as audit defence. For a simple W-2 return, the free paths produce the identical filed return; paid software mainly buys convenience and support, not a better refund.
Does paid software get me a bigger refund?
No. The refund is determined by the tax law applied to your figures, not by the software. Any compliant product, free or paid, that enters the same income, deductions, and credits produces the same refund. What paid software can do is reduce the chance you miss a deduction or credit you did not know to claim; a guided interview surfaces situations a blank form does not. That is a thoroughness benefit, not a larger-refund guarantee.
What is the difference between free federal and free state filing?
Federal returns are easier to file free than state returns. The IRS subsidises the Free File program, so federal preparation and e-filing are free for eligible filers. State Departments of Revenue do not fund that program, so a free federal product may still charge $15 to $40 for the state return. Several states (California's CalFile, Pennsylvania's myPATH, Massachusetts's MassTaxConnect, and others) run their own free state portals; otherwise some Free File partners include free state for specific states.
When is paying for tax software actually worth it?
Paid software earns its fee when a return is complex enough that the manual alternative costs more time than the fee saves: multiple K-1s, rental property across states, a detailed Schedule C with depreciation, large itemised deductions, or stock and crypto with many lots. For those returns the guided interview and import features can save hours. For a simple return under the $89,000 AGI ceiling, paying is rarely justified; IRS Free File does the same job for $0.
Is free tax filing only for simple returns?
No. IRS Free File partners support most common schedules (Schedule A, B, C, D, and credits like education and the premium tax credit), though support varies by partner. MilTax handles military-specific complexity at no cost. Free File Fillable Forms supports essentially every federal form for filers willing to do the arithmetic. The genuine limits are guidance depth and state coverage, not the federal forms themselves.
If I start free and my return gets complex, will I be forced to pay?
Inside the IRS Free File flow (started at IRS.gov/freefile), partners are barred from pushing you to a paid edition mid-return. On a commercial preparer's own free edition, adding an HSA, an investment sale, or an itemised deduction commonly triggers a paid upgrade prompt. The difference is the door you came in through, not the return itself.