You saw the big promise: “Free tax filing!”
Then you filed your federal return… and suddenly you hit the wall:
“Your state return requires an upgrade — $40.”
This isn’t an accident. It’s a business model.
Here’s how tax software companies lure you in — and how to avoid being trapped by the state return upcharge.
Most online tax prep companies lead with:
But here’s the fine print they don’t want you to notice:
Federal is free — state is not.
The average “state e-file fee” across the industry is:
Some platforms even require the paid version of the software before they’ll allow state filing at all.
Because state e-file fees are the profit center.
Federal returns are:
State returns are:
Federal returns bring you in the door —
State returns pay for the business.
Companies known for this structure include:
The consumer experience typically looks like this:
And that’s intentional.
Once you’ve:
You won’t want to start over.
Tax software companies know this.
They don’t need to convince you $40 is fair.
They just need to convince you it’s easier than re-entering everything elsewhere.
There are real alternatives:
If your income is within the eligibility limit (typically under $79,000), some partners offer:
Not all partners do — but several do.
Many states allow:
Examples include:
You can file federal through a software platform —
And file state separately — free.
IRS-backed volunteer tax services for:
These services complete both returns — for free.
Look for red-flag language like:
The biggest warning sign:
They never mention state filing until AFTER federal is completed.
That’s by design.
If you were promised “free filing” —
But ended up forced to pay for state filing —
You were not mistaken.
You were marketed to.
You are not obligated to pay the state fee —
You only feel locked in because your data is already entered.
Knowing this trick is the first step in avoiding it.
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