TurboTax is losing price-sensitive customers to free and low-cost tax filing alternatives, prompting Intuit to revise its growth strategy after revenue projections missed Wall Street targets.
Intuit's TurboTax is under mounting pressure as more Americans leave the platform due to rising costs, with price now cited as the primary reason for user departures. The company's revised fiscal 2027 revenue growth forecast of 9% to 10%-down from 14% in fiscal 2026-fell short of analyst expectations, according to Reuters, and led to a sharp decline in Intuit's share price.
After Intuit published its latest forecast, the company's shares dropped sharply and several brokers downgraded their outlooks, citing a broader reset in the consumer business.
Intuit projects TurboTax revenue growth of just 2% to 3% in fiscal 2027, a significant slowdown from the 7% expected in 2026. The company is deliberately lowering average revenue per user to attract more customers and defend market share, reversing last year's strategy of steering users toward higher-priced assistance packages. According to Intuit's latest quarterly update, TurboTax Live revenue is expected to rise 36% to $2.8 billion, with a 38% increase in TurboTax Live customers. However, overall TurboTax Online units are projected to decline by about 2%, and the number of free version users has dropped to approximately 7 million from 8 million a year earlier.
Intuit has stated that it is intentionally lowering initial revenue per DIY customer to expand its user funnel, retain more users, and increase its share of e-filed returns, even if this strategy results in weaker short-term revenue.
Jefferies analysts forecast TurboTax revenue growth of 2% to 3% in 2027, compared to about 4.8% for H&R Block, as reported by MarketWatch. If realized, this would mark the first time in over a decade that TurboTax's revenue growth falls below 7%. Intuit's overall fiscal 2027 revenue outlook of $23.28 billion to $23.51 billion also missed Wall Street expectations, reflecting the impact of competitive pressures and changing consumer behavior.
Intuit's pricing dilemma reflects broader trends in consumer software: aggressive price increases risk customer attrition, while price cuts can erode revenue. The company expects average revenue per TurboTax user to decline as it adjusts pricing to attract and retain clients. While TurboTax remains a leading U.S. tax prep brand, the proliferation of credible free alternatives-especially those backed by the IRS-forces Intuit to justify its fees through service, support, or features.
TurboTax is part of Intuit's larger portfolio, which includes QuickBooks, Credit Karma, and Mailchimp. However, the slowdown in tax software growth has led Intuit to lower its three-year growth target for Global Business Solutions to 10%-15%, down from 15%-20%. Shares have declined significantly in 2024, and the latest guidance has heightened concerns about the sustainability of Intuit's premium pricing strategy.
According to Intuit's Q3 2024 earnings report, TurboTax Live revenue reached $2.8 billion, up 36% year-over-year, while the number of TurboTax Live customers increased by 38%. Despite this, the total number of TurboTax Online units declined by about 2%, and the number of users of the free version dropped from 8 million to 7 million compared to the previous year.
TurboTax's experience highlights the risks facing subscription and financial software providers as consumers become more selective about paid services. The expansion of free and low-cost tax filing options gives Americans more choice, but also forces companies like Intuit to continually reassess the value proposition of their products in a competitive and price-sensitive market.
