Gen Z Driving Shift Toward Digital Tax Payments, According to New Report From ACI Worldwide

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.