Tax Planning Fees: How to Price Tax Planning Services

An hourly invoice tells a client how long you worked. It doesn't tell them what they got. A flat fee with no scope behind it has the opposite problem: it reads the same whether it covers two hours or twenty. Tax planning fees go wrong in both directions for the same reason. The number isn't tied to anything the client or your Reviewer can check.

This guide is for owners, tax partners, and Reviewers at firms of 2 to 100 people with a recurring S-corp book. Define the deliverable. Estimate the preparer hours and the review hours it takes to sign it. Apply your own target rate. Then choose how to package it. That order holds whether you're adding planning to a return practice or building a tax planning business on its own.

Start with the deliverable, not the hour

Before any number, decide what the client receives. For most S-corp owners that's a written plan with a recommendation for each planning area and a Reviewer sign-off. The full anatomy lives in the guide to what a tax plan deliverable should contain.

Once the deliverable is fixed, pricing is arithmetic. Cost-based fee = (preparer hours + Reviewer hours + meeting hours) x your target rate. Packaging comes after.

The line most estimates leave out is review. A plan your Reviewer hasn't signed is a draft. Reviewer time is what makes the plan defensible, so it belongs in the price.

What drives the hours

Score each client against these drivers before you quote:

• Entities: one S corporation, or an S corp plus a partnership or a second company.
• States: one state, or wages and income sourced to several.
• Owner salary: the salary decision needs a reasonable-compensation basis. If there's no documented basis yet, that's extra work. Our overview of the Reasonable Compensation Study covers what that basis looks like.
• Retirement plan: none, an existing plan, or a new plan design.
• Estimated tax schedule: how many of the four 2026 individual due dates you'll re-project for: April 15, June 15, and September 15, 2026, and January 15, 2027 (IRS Form 1040-ES, as of 2026-09-23).
• Touchpoints: one year-end meeting, or a recurring schedule through the year.

Three pricing models for tax planning fees

How much to charge for tax planning depends on which of three models you pick. Every example below uses a placeholder rate of $200 an hour so the arithmetic is easy to follow. It isn't a market rate, and it isn't a recommendation. Replace it with your firm's own number.

Fixed fee per plan

One deliverable, one price. The scope goes in the engagement letter, along with what isn't included.

Illustrative example: A single-entity, one-state S-corp owner with an existing retirement plan. Preparer hours: 6. Reviewer hours: 2. Client meeting hours: 2. Total: 10 hours. 10 x $200 = $2,000 fixed fee. Actual results vary based on income, industry, and state.

Fixed fees work when the deliverable is the same every year. The risk is scope creep: a mid-year acquisition or a new state quietly doubles the work. The fix is a change-order line in the letter.

Tiered packages

Tiers let you quote without re-estimating every client. Key each tier to the complexity drivers above, not to the client's income.

Illustrative example: The table figures are placeholders chosen to show the method. Tier 2: 9 + 3 + 2 = 14 hours; 14 x $200 = $2,800. Tier 3: 14 + 5 + 4 = 23 hours; 23 x $200 = $4,600. Actual results vary based on income, industry, and state.

The risk with tiers is self-selection. A client picks Tier 1 and has three states. Fix it with intake criteria: the complexity drivers decide the tier, and your firm assigns it.

Value-based pricing

Value-based pricing anchors the fee to what the decisions are worth to the client: a salary decision, a retirement plan design, a multi-state question. It can price above the cost-based floor when the stakes justify it. It's also the riskiest of the three.

Two rules keep it honest. First, the value estimate has to be documented: the baseline projection, the scenarios, the assumptions, and the sources, all in the workpaper. A projected difference between scenarios is an estimate. The plan may produce it, or it may not. Second, the fee is set up front and doesn't depend on any outcome.

Illustrative example: A Tier 2 client's cost-based floor is 14 hours x $200 = $2,800. The firm quotes a value-based fee of $3,500 because the plan includes a new retirement plan design the client asked for. The floor check: $3,500 is at or above $2,800, so the quote passes; the $700 above the floor is margin, not a projection of anything the client will gain. Actual results vary based on income, industry, and state.

If the documented baseline isn't in the file, don't price on value. You'd be selling a number no one can check.

Price the review time explicitly

Every recommendation should trace to a source figure, and the Reviewer signs off before the client sees it. That's real work, and it takes hours. Put them on the worksheet as their own line.

Inputs that already carry their sources shorten review. The salary line is the clearest case: when the reasonable-compensation figure comes with a source citation on every input, the Reviewer checks the trail instead of rebuilding it.

TracePrep ships one workflow today, the Reasonable Compensation Study. It produces the salary input with a source citation on every figure, a record the Reviewer signs off on, and workpapers the Firm keeps. A tax-planning workflow is in development. See how a Study is built.

Tax planning fees worksheet (copy-ready)

Here's the worksheet. Copy it into your engagement file and fill one per client, per year.

Illustrative example: Filled with the fixed-fee example above, line 7 = 10 hours, line 9 = 10 x $200 = $2,000, and line 12 = $2,000. Actual results vary based on income, industry, and state.

Two dates belong in the scope line. A calendar-year Form 1120-S for 2026 is due March 15, 2027, or September 15, 2027 with an extension (Form 1120-S instructions, as of 2026-09-23). If the plan assumes a safe harbor for estimates, name which one: 100% of prior-year tax, 110% if prior-year AGI was over $150,000 ($75,000 married filing separately), or 90% of current-year tax (IRC §6654(d)(1), as of 2026-09-23).

Price what you sign

Pick one client you already plan for and fill the fourteen lines. Compare line 9 with what you billed that client last year. The gap tells you whether your current fee covers the review time or quietly absorbs it. When you're ready to put the salary input on documented evidence, Get started.

Not tax advice. TracePrep is a software product from TracePrep Inc., not a CPA firm. This content is operator experience for educational purposes; it is not tax advice and has not been reviewed by a licensed CPA. Consult a qualified tax professional for guidance on your specific situation. Source citations in TracePrep workpapers support audit defense but do not guarantee IRS outcomes.