What is Deduction?
Deduction is a US tax preparation and advice service that combines an AI tax agent with licensed CPAs. The agent is called Taylor, CPAI. Nothing on this page is tax or financial advice.
It works as a conversation instead of a set of forms. You upload or forward documents such as W-2s and 1099s to a secure Vault, ask Taylor questions by chat or email, and Taylor prepares the return. A licensed tax professional reviews it, you approve it, and Deduction files with the IRS and your state.
Key Features
Deduction’s key features are Taylor, CPAI, an AI tax agent that answers questions and prepares US returns, a licensed CPA review of every return, year-round planning, an encrypted Vault and filing in all 50 states.
- Taylor, CPAI: An AI tax agent that gathers your documents, answers tax questions by chat or email and prepares the return through conversation instead of forms.
- CPA review: A licensed CPA reviews every number and form before filing, and nothing is submitted until you approve the return.
- Year-round planning: Unlimited conversations with Taylor and tax planning outside filing season are included in the annual fee.
- Vault: Stores documents you upload or forward by email, encrypted at rest and in transit. Deduction says only you and its CPA team can access it.
- Tax Finder and Deduction Tracker: Tools listed on the website for identifying and logging expenses that may be deductible.
- Federal and state filing: Files the federal return and state returns for all 50 states, including multi-state situations.
- Complex income types: Handles RSUs, ISOs, NSOs and ESPP, cryptocurrency, rental income, K-1s, self-employment income and retirement contributions or conversions, according to the official FAQ.
Pros
Deduction’s main advantages are a licensed CPA review behind the AI agent, free use until you file, one fixed annual price and a written guarantee on penalties caused by its own errors.
- Human sign-off: Every return prepared by the AI is checked by a licensed CPA before it is filed.
- Free until you file: You can talk to Taylor, upload documents and get guidance without a credit card. Payment is due only when you are ready to file.
- One fixed price: Personal returns cost $499 a year, which covers federal and state filing, planning and unlimited conversations.
- Handles complexity: Equity compensation, crypto, rental property, K-1s and self-employment are all listed as supported.
- Written guarantee: Deduction covers IRS or state interest and penalties when an error is solely its mistake and you supplied accurate, complete information.
- Data commitments: Deduction states that it never sells personal data and never uses your financial data to train AI models.
Cons
Deduction’s main drawbacks are that it handles US returns only, costs $499 a year even for a simple return, excludes complex businesses and limits its guarantee to interest and penalties.
- US only: The service prepares US federal and state returns and does not cover other countries.
- Costly for simple returns: At $499 a year, someone with a single W-2 and no other income may find cheaper filing software sufficient.
- Guarantee limits: The guarantee covers interest and penalties, not any additional tax you owe, and applies only when the error is solely the fault of Deduction.
- Complex businesses excluded: Multi-employee S-Corps and C-Corps are not supported. The $999 plan covers only solo S-Corps and small partnership LLCs.
- Some policies unpublished: The FAQ does not cover refunds, audit support or amended prior-year returns, and it describes phone contact as coming soon.
- Young company: Deduction raised pre-seed funding in November 2025, so it has a short track record compared with established tax brands.
Who is Using Deduction?
- Employees with equity: RSUs, ISOs, NSOs and ESPP.
- Freelancers and creators: Schedule C and quarterly estimates.
- Investors and landlords: Crypto, capital gains and rental income.
- Solo business owners: Simple S-Corps and partnership LLCs.
Pricing
Deduction is free to use for advice, and filing costs $499 per year for personal returns (official prices, October 2026).
| Plan | Price | What you get |
|---|---|---|
| Free | $0 | Chat with Taylor, upload documents and get tax guidance; no card required |
| Personal | $499 / year | Unlimited Taylor conversations, planning, CPA-reviewed federal and state filing, Vault, guarantee |
| Solo business | $999 / year | Simple S-Corp or small partnership LLC returns |
You pay only when you are ready to file. No refund policy is published in the FAQ.
Disclaimer: Pricing can change. Check the official Deduction website.
What Makes Deduction Unique?
Deduction stands out for placing a licensed reviewer behind an AI agent at a fixed annual price. Do-it-yourself tax software leaves the judgement to you, and a traditional accountant costs more and is slower to reach. Deduction sits between the two.
Compatibilities and Integrations
- Platform: Any device with a web browser; no app to download.
- Channels: In-app chat and email, with phone described as coming.
- Documents: Upload or forward by email.
- Integrations: No third-party integrations are listed.
Deduction Tutorials
You can start with Deduction in a few minutes:
- Sign up at deduction.com without a card.
- Upload or forward your tax documents to the Vault.
- Ask Taylor your questions and review its guidance.
- Pay when ready, check the CPA-reviewed return and approve filing.
How We Rated It
| Criterion | Score | Why |
|---|---|---|
| Accuracy and Reliability | 4.3/5 | CPA review before filing |
| Ease of Use | 4.5/5 | Chat and email, no forms |
| Functionality and Features | 4.4/5 | Advice, planning and filing |
| Performance and Speed | 4.2/5 | Review step adds time |
| Customization and Flexibility | 4.1/5 | Many tax situations |
| Data Privacy and Security | 4.2/5 | Encryption, no data sales |
| Support and Resources | 4.2/5 | CPAs and FAQ library |
| Cost-Efficiency | 4.0/5 | Dear for simple returns |
| Integration Capabilities | 3.6/5 | Email and uploads |
| Overall Score | 4.2/5 | Average of the nine criteria |
Summary
Deduction is a sensible option for US taxpayers whose situation is too complex for basic software but who do not want a full-service firm. Read the return carefully and consult an independent professional for major decisions.
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