Data portability could help unlock tax freedom
As U.S. Tax Day approaches on April 15, millions of Americans are once again logging into the same tax software they’ve used for years—often not because they love it, but because all their data is already there.
For many, switching to another tax prep service feels impossible. Manually re-entering years of financial data, income history, and deductions into a new platform is time-consuming and frustrating. Even when more affordable or user-friendly options exist—including IRS-endorsed free services—users feel locked in or pressured to stay with the same provider.
But it doesn’t have to be this way.
This is where data portability comes in. If users could easily transfer their tax history from one provider to another, they’d have the freedom to choose the service that best fits their needs—whether that’s one with a better user interface, stronger customer support, lower fees, or better privacy practices. Data portability—at its heart—breaks the cycle of vendor lock-in and puts control back in users’ hands.
This isn’t just a tax season problem—but it is a powerful, relatable example of how data portability can promote competition, reduce costs, and improve services across digital markets. Tax prep software might not seem like the most exciting place to start a conversation about data rights, but it’s exactly the kind of everyday experience that shows why giving users more control over their data matters.
Tax services today offer some options for data transfer, but most of them are not very useful. Often these options are limited to downloading data, transferring data from past years over the same platform (and not between platforms), or transferring data from centralized platforms with specific pieces (think bringing in W-2s from a payroll company, for example). Some companies have leaned into data portability a bit more: in January 2024, H&R Block introduced a “Direct Import” feature that allows users to “pull in an individual’s prior year tax return data from TurboTax directly into H&R Block DIY online products.”
It’s a step. It’s great that there’s a growing recognition among tax preparation services that data portability is of great importance to consumers—and that such features not only enhance user experience but also promote consumer choice and competition within the industry.
But there’s more we need to do. Tools like “Direct Import” are kind of cumbersome, in that if either TurboTax or H&R Block makes changes to how they handle data, the tool might have to be changed. Now imagine many different services, and many different tools that transfer among them. Any time any one service changes how it handles tax data, a large number of transfer tools might break, and need to be updated. At DTI, we focus on building tools that use a shared data model which everyone agrees to work towards, so that it’s easier for services to update without breaking a bunch of transfer tools in the process. Nothing like that exists in the tax world, as best we can tell.
The current portability solutions for the tax data world aren’t simple and secure ways of easily ensuring that consumers can transfer their data across services at scale. They provide access, yes. But for portability to serve as a driver of competition and user agency, it needs to be seamless, standardized, and embraced across the industry. Anything less runs the risk of reinforcing the status quo and keeping users locked in.
Tax filing data offers a compelling, everyday example of how meaningful data portability benefits people. Everyone wants their taxes to be easier and less painful to file. Robust, cross-platform data portability tools don’t currently exist for tax preparation services. But they absolutely should.
When people feel stuck using the same service year after year because their data can’t easily move with them, it limits choice, raises costs, and reduces competitive pressure on providers to improve. The tax prep ecosystem shows in concrete terms why portability matters: it empowers users, encourages innovation, and helps ensure that convenience doesn’t come at the cost of consumer freedom.