How to Raise Tax Preparation Fees Without Losing Clients

Most tax practitioners wait too long to raise fees, then raise them too little. The result: margins shrink year after year while workload stays constant. The fix is raising prices annually, communicating clearly, and accepting that some client loss is healthy.

80% of accounting firms plan to raise prices in 2026.¹ The average 1040 base fee jumped 45.7% in two years, from $162 in 2024 to $236 in 2026.² If you haven’t raised your rates recently, you’re falling behind the market.

This guide covers exactly how to raise your tax preparation fees: when to do it, how much to increase, what to say, and how to handle clients who push back.

Table of Contents

• When to Raise Your Fees
• How Much to Increase
• The Price Increase Letter
• Phone Scripts for Fee Conversations
• Handling Client Pushback
• Which Clients to Increase First
• Timing Your Announcement
• What Happens When Clients Leave
• Annual Fee Reviews

When to Raise Your Fees

Raise your fees when any of these conditions apply:

Your rates haven’t changed in over a year. Annual increases should be standard practice. Clients expect prices to rise with inflation. A 5% annual increase barely keeps pace with cost of living, and clients rarely object to modest yearly adjustments.

New clients pay more than existing clients. If you quoted $800 to a new client last month but a similar existing client still pays $500, you have a legacy pricing problem. The gap will only grow unless you address it.

You’re working too many hours for too little profit. If tax season leaves you exhausted and underpaid, your rates are too low. The math doesn’t lie: 60-hour weeks at inadequate rates isn’t sustainable.

You’ve added capabilities. New software, additional staff, expanded services, or specialized certifications all justify higher fees. You’re delivering more value.

Your competitors charge more. Research what other firms in your area charge. If you’re at the low end, you’re attracting price shoppers and repelling clients who associate low price with low quality.

If you’re asking “should I raise my fees?” the answer is almost always yes. The harder question is by how much.

How Much to Increase

The data shows most firms increase by 5-10% annually.¹ But the right increase depends on your current position relative to the market.

If you’re at market rate: 5-7% annually maintains your position while covering cost increases.

If you’re below market: Larger increases are justified. A $300 return that should be $500 needs more than a 5% bump. Consider 15-25% increases phased over 2-3 years, or a single larger adjustment with proper communication.

If you have legacy clients paying far below current rates: These need individual attention. A client paying $250 for a return you now quote at $750 needs a direct conversation, not just a letter.

The fear of losing clients leads most practitioners to increase too conservatively. But consider: a 20% price increase means you can lose 16% of your clients and still generate the same revenue with less work.³

Here’s the math:

You work less and earn the same. The clients who leave are typically your most price-sensitive, highest-maintenance relationships.

The Price Increase Letter

Written communication creates a record and gives clients time to process before responding emotionally. Send this 60-90 days before the new rates take effect.

Subject line: “2026 Tax Season Fees”

Keep the letter brief. Three to four paragraphs maximum. Here’s a template:

Dear [Client Name],

Thank you for your continued trust in [Firm Name]. We value our relationship and appreciate the opportunity to serve you.

Starting with the 2026 tax season, our fee for your return will be $[new amount], up from $[old amount]. This adjustment reflects our investment in improved technology, expanded capabilities, and the increased complexity of tax compliance.

If you have questions about this change or want to discuss your specific situation, please contact me directly at [phone/email].

We look forward to serving you this tax season.

[Signature]

What this letter does right:

• States the new fee directly. No hedging or burying the number.
• Provides brief justification. Technology, capabilities, compliance complexity are legitimate reasons clients understand.
• Offers to discuss. Some clients need a conversation. Make yourself available.
• Stays short. Long explanations sound defensive.

What to avoid:

• Apologizing. “We’re sorry to inform you” signals that you think the increase is unreasonable.
• Over-explaining. Listing every cost increase in detail invites debate about whether each is justified.
• Offering discounts preemptively. Wait for pushback before discussing alternatives.

For significant increases (20%+), consider a phone call before the letter. The letter then serves as written confirmation of what you discussed.

Phone Scripts for Fee Conversations

Some clients warrant a personal call, especially longtime clients or those facing significant increases. Here are scripts for common situations.

Opening the conversation:

“Hi [Name], I wanted to reach out before you receive my letter about 2026 fees. We’re adjusting our pricing this year, and I wanted to explain what that means for you specifically.”

Explaining the increase:

“Your fee will be $[new amount] this year, up from $[old amount]. This reflects where we are with current market rates and the investment we’ve made in [technology/staff/capabilities]. I wanted you to hear this from me directly rather than just getting a letter.”

When clients ask why:

“Our costs have increased across the board, and our rates hadn’t kept pace with the market. We’ve also added [specific improvement] that benefits clients like you. The new rate reflects the value we’re providing.”

When clients mention competitors:

“I understand you have options. Our clients stay with us because [specific value: accuracy, availability, knowing their situation, handling notices]. If the new rate doesn’t work for your budget, I understand, and I’m happy to discuss what makes sense.”

Stop talking after you’ve explained. Silence is uncomfortable, but filling it with discounts or additional justification weakens your position.

Handling Client Pushback

Some clients will push back. Prepare responses in advance so you don’t negotiate against yourself in the moment.

“Your prices went up a lot.”

“Yes, we’ve adjusted to reflect current market rates. Our pricing had fallen behind, and this brings us in line with what the service is worth. I’m confident you’ll continue to receive excellent value.”

“I can get it done cheaper elsewhere.”

“That may be true. Our fee reflects professional preparation, year-round availability, and someone who knows your situation. If a lower-cost option fits your needs better, I understand.”

Do not argue about competitor pricing or disparage other preparers. State your value and let the client decide.

“I’ve been with you for years. Don’t I get a discount?”

“I value our relationship, which is why I’m calling you personally. The new rate applies to all clients, and it reflects what the service costs to deliver well. I hope you’ll stay with us.”

Long tenure doesn’t entitle clients to below-market rates forever. If anything, longtime clients have received years of underpriced service.

“Can you hold last year’s rate for me?”

“I can’t hold the old rate, but I can offer [alternative: payment plan, reduced scope, early-bird pricing if they commit by a certain date]. Would any of those work for you?”

Have alternatives ready, but don’t volunteer them until asked.

Which Clients to Increase First

Not all clients need the same approach. Segment your client list before sending communications.

Tier 1: Already at market rate These clients receive the standard letter with a 5-10% increase. Low risk of attrition.

Tier 2: Moderately underpriced These clients pay 15-30% below where they should be. Use a larger increase (10-20%) with a personal note acknowledging the change.

Tier 3: Significantly underpriced These clients pay 40%+ below market. They need a phone call explaining that their rate will increase substantially over the next 1-2 years, or a single larger adjustment with clear explanation.

Tier 4: Problem clients Difficult clients who also underpay should get the largest increases. Either they accept the new rate and become profitable, or they leave. Both outcomes are acceptable.

Prioritize conversations with Tier 3 clients. Written communication alone may not convey the significance of the change or give them opportunity to ask questions.

Timing Your Announcement

For tax preparation, announce fee increases in November or December for the upcoming filing season. This gives clients time to budget and decide before tax documents arrive.

Why November-December works:

• Business clients are doing year-end planning and can budget accordingly
• Individual clients haven’t yet committed to their tax preparer for the year
• You have time to handle questions before the busy season starts
• Clients who want to leave can find alternatives without disrupting your workflow

What to avoid:

• January announcements. Too late for clients to adjust, feels like ambush.
• Mid-season changes. Never raise rates on work in progress.
• Post-filing surprises. The worst approach: billing more than quoted after completing the return.

If you’re reading this during tax season and haven’t raised rates yet, note it for next year. Make fee reviews part of your October-November routine.

What Happens When Clients Leave

Some clients will leave. This is healthy.

When firms raised prices in 2025, two-thirds either lost no clients or lost some but maintained stable profitability.⁴ The clients who leave over reasonable price increases are typically:

• Price shoppers who would leave eventually anyway
• High-maintenance clients who consume disproportionate time
• Clients who don’t value professional service
• Clients better served by simpler (cheaper) solutions

One tax professional shared their experience: “We almost doubled some client fees from $850 to $1,600 and had little client attrition. Communicating the increase in advance is key.”⁵

The clients who stay after a price increase are better clients. They chose you at the higher rate. They value the relationship. They’re less likely to complain or haggle.

If you lose more than 10-15% of clients to a reasonable increase, examine what happened. Were increases too large? Was communication poor? Or were you serving the wrong client segment to begin with?

Annual Fee Reviews

Make fee reviews a recurring process, not an occasional event.

October: Review and analyze

• Pull revenue by client from the prior year
• Calculate effective hourly rate for each client (revenue / estimated hours)
• Identify clients below your minimum acceptable rate
• Research competitor pricing and market rates
• Decide on increase percentages by client tier

November: Communicate

• Send price increase letters to most clients
• Schedule calls with clients receiving significant increases
• Brief your team so everyone gives consistent answers

December: Handle responses

• Take calls from clients with questions
• Document who accepts, negotiates, or leaves
• Adjust client list and capacity planning accordingly

January: Implement

• New rates in effect for all engagements
• Update engagement letter templates
• Track which clients actually return

This rhythm prevents the “we haven’t raised prices in three years” problem. Small annual increases cause less friction than large occasional ones.

Start This Year

If your rates haven’t increased recently, start now. Calculate where your clients sit relative to market rates. Identify your most underpriced relationships. Draft your letter. Schedule your calls.

80% of your competitors are raising prices this year. Don’t be the firm that falls further behind.

For guidance on setting minimum fees and overall pricing strategy, see our minimum fee guide and pricing strategies overview.

Ready to make every client profitable? Conto automates the data entry that eats into your margins, letting you serve more clients or work fewer hours at your new rates.