All tax preparation expenses, including software, are considered deductible. However, tax preparation expense is one of a slew of deductions that are subject to the 2% rule. That means you only get to deduct the amount above 2% of your adjusted gross income for all deductions claimed in this class. Obviously, if you use free tax software, no tax preparation fee deduction applies. Tax planning software may or may not be deductible, depending on the functions it performs. For more information on deducting tax preparation fees and other items that are subject to the 2% rule, read IRS Publication 529, Miscellaneous Deductions.