Tax-prep giant H&R Block released several new financial statements last week, revealing that it paid no federal taxes on its U.S. income in 2025. While H&R Block did not explain how it pulled this off, it did make a public disclosure, required by the European Union, characterizing one-third of its global profits as earned in Ireland, a low-tax country where the company offers no tax services and has only 15 employees.
H&R Block reported $527 million in U.S. profits in 2025. Setting aside some “GILTI” tax the company paid related to undertaxed foreign income, the company paid no federal income tax. The first question this raises is how a corporation is able to generate large profits from American taxpayers who are simply trying to comply with the law, filing their taxes by April 15. The second question is how the company itself avoids paying taxes on these profits.
The first question, how H&R Block makes money, is answered in part by the favor provided to the company by the Trump administration in ending the popular Direct File program, which allowed millions of Americans to file their taxes directly with the IRS for free.
Lobbyists for the tax-prep industry argued that the program was too costly for the federal government to maintain. This is despite another tax-prep giant, Intuit, receiving more in federal tax subsidies than the cost of the entire Direct File program.
The company has also acknowledged in the recent past that the new Trump tax law has created enough complexity to drive more people to need help with tax preparation, which is always good for its bottom line. Even in cases where the company doesn’t make any money off those customers in the current year because those taxpayers can access free services, their executives have repeatedly expressed desire to draw those filers in as potential paid customers in the future.
During last week’s earnings call, H&R Block’s CEO told a very different story, claiming that the 2025 tax law “gave taxpayers more confidence that they could do their taxes on their own” meaning not literally on their own but paying to use the company’s software rather than paying an actual person with an office in a strip mall to do their taxes for them.
All this skirts around the real reason H&R Block is making a killing. These days when you interact with the federal government, for example if you want to apply for Social Security or Medicare, you can do so online. But tax filing is different because the tax prep industry has successfully lobbied to virtually require Americans to use their services to file taxes. Direct File was an attempt to align tax filing with the other ways we interact with the federal government, and the Trump administration ended it.
The second question is how H&R Block avoided paying federal income taxes on its profits in 2025. This is partly explained by filings made not in the U.S., but rather in the European Union. Specifically, it appears that the company is taking advantage of holding companies in Ireland to disguise a large portion of its income. In 2024, the company reported three subsidiaries as Irish holding companies. Holding companies are not actual businesses producing goods or services but are instead legal and accounting fictions that hold stock or intangible assets like intellectual property, often in offshore tax havens.
In this past year, H&R Block reported an entire third of their worldwide income in Ireland. This is interesting considering the company doesn’t offer any tax-prep services in Ireland.
Perhaps it has a large number of employees in Ireland? To the contrary, it reports only 15 full-time employees in Ireland, less than 1 percent of the global H&R Block workforce. The company has substantial workforces in India and Canada, but records very little income in those countries.
Based on this financial reporting, each employee in Ireland produced about $16 million in profit for H&R Block.
Some readers might note the supposed productivity of their 15 Irish employees and say, “Fair play, lads. Ye deserve a few extra quid!” Others might use a more common American expression: “Bullshit.”
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