Gen Z Driving Shift Toward Digital Tax Payments, According to New Report From ACI Worldwide
March 27 2024 - 9:00AM
Business Wire
Report finds that filing taxes electronically
through popular software continues to decrease in popularity
A new tax payment report from ACI Worldwide (NASDAQ: ACIW), a
global leader in mission-critical,
real-time payment solutions, developed in partnership with YouGov,
shows that younger taxpayers – particularly Gen Z – continue to
exhibit unique tax filing and payment behavior compared to older
generations. These behaviors reflect growing mistrust of
professional tax institutions and a generational shift toward
personal networks and digital payment platforms. This has
nationwide economic implications given the IRS reports
26-to-34-year-olds file more taxes than any other group.
This year’s ACI-commissioned YouGov report found that Gen Z is
less likely than all other demographics to pay taxes via electronic
fund withdrawals from checking or savings accounts (17%). Unlike
Baby Boomers, Gen Xers and even Millennials, Gen Z respondents
preferred alternative payment methods (10%) and credit cards
(17%).
Additionally, Gen Z taxpayers are several times more likely to
engage sources outside of professional tax preparers. When asked
where they would go to find information about how to pay any taxes
they may owe, Gen Z respondents were more than twice as likely as
Millennials to use Google (17%) and more than four times as likely
as Millennials to ask family/friends (17%). In comparison, only 1%
of Gen X and 3% of Baby Boomer respondents, respectively, said they
would use Google. Gen Z is also the least likely to use tax
preparation services (e.g., TurboTax, H&R Block, etc.),
independent professional tax preparers or the IRS website.
“This year's findings highlight a pivotal shift towards digital
and alternative payment methods, especially among Gen Z. As they
diverge from traditional tax payment avenues, it’s imperative to
adapt and innovate. ACI Worldwide is at the forefront, ensuring our
payment solutions cater to this digital preference while
maintaining the highest security standards,” said Ron Shultz, EVP
and GM, ACI Speedpay at ACI Worldwide.
This year’s study also found that, across all generations,
preferences have shifted over time toward digital payments. In
2020, 50% of those surveyed preferred digital payment methods, and
32% preferred analog methods; now, those numbers are 61% and 22%,
respectively.
“It is clear that there is a holistic shift in payment
preferences, demonstrating a decisive move toward digital methods
across all age groups. Our latest report underscores the need for
financial institutions to adapt to the cultural and digital
transformation already taking place,” Shultz added.
For more than 20 years, ACI has supported the billing and
payment needs of federal, state and local government entities with
secure, Payment Card Industry-compliant solutions. ACI is one of
three service providers for the IRS and is one of the platforms
taxpayers can use for IRS DirectPay, a new payments system
currently piloting in 12 states. In recent years, ACI has added
popular alternative payment methods to meet the preferences of
younger taxpayers, adding PayPal, PayPal Credit and Venmo as
payment options. To date, millions of customers have paid their
taxes and other bills using ACI Payments, Inc.
Additional Survey Insights
- Top three ways respondents plan to file their taxes this year:
- 39% will file electronically through popular software (e.g.,
TurboTax, H&R Block, TaxSlayer)
- 30% will file electronically or by mail through a professional
(e.g., CPA, tax accountant)
- 10% will file by mail/paper
- This marks the third consecutive survey in which the percentage
of respondents who plan to file electronically through popular
software has decreased, from 45% in 2022 to 42% in 2023 to 39% in
2024.
- Top five ways respondents would spend their tax refund, if they
received one:
- 46% would deposit into a savings account
- 38% would pay down debt (e.g., credit cards, loans, etc.) – a
4% year-over-year increase, perhaps indicating a strain on the
consumer amid an inflationary macroeconomic environment
- 21% would make minor purchases (e.g., clothing, sporting goods,
etc.)
- 17% would make home improvements
- 14% would invest in stocks, bonds, cryptocurrency, etc. – a 3%
year-over-year increase
Survey Methodology All figures, unless stated otherwise,
are from YouGov Plc. The total sample size was 1,185 adults. Field
work was undertaken between February 29 and March 1, 2024, and was
carried out online. The figures have been weighted and are
representative of all U.S. adults (aged 18+). Generations were
defined as follows: Gen Z (born after 2000), Millennial (born
1982-1999), Gen X (born 1965-1981) and Baby Boomer (born
1946-1964).
About ACI Worldwide ACI Worldwide is a global leader in
mission-critical, real-time payments software. Our proven, secure
and scalable software solutions enable leading corporations,
fintech companies and financial disruptors to process and manage
digital payments, power omni-commerce payments, present and process
bill payments, and manage fraud and risk. We combine our global
footprint with a local presence to drive the real-time digital
transformation of payments and commerce.
© Copyright ACI Worldwide, Inc. 2024 ACI, ACI Worldwide, ACI
Payments, Inc., ACI Pay, Speedpay and all ACI product/solution
names are trademarks or registered trademarks of ACI Worldwide,
Inc., or one of its subsidiaries, in the United States, other
countries or both. Other parties' trademarks referenced are the
property of their respective owners.
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Contacts/Media Relations:
Nick Karoglou I Head of Communications and Corporate Affairs I
nick.karoglou@aciworldwide.com
Edelman Smithfield | aci-us@edelmansmithfield.com
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