<PAGE>

                                                                   EXHIBIT 10.44
 
                          INDEMNIFICATION AGREEMENT



          This Indemnification Agreement (this "Agreement") is made and entered
into this 22 day of December, 1998, by and among James L. Bildner and Nancy J.
Bildner (James L. Bildner together with Nancy J. Bildner being referred to
collectively as "the Indemnitors," and each singly as an "Indemnitor") and Tier
Technologies, Inc., a corporation organized under the laws of the State of
California (the "Company").


                                  RECITALS


     A.  Whereas, to evidence and secure a certain loan made by NationsBank,
N.A. ("Lender") to the Indemnitors, the Indemnitors have executed and delivered
to Lender the following documents:

          1.  Promissory Note dated August 27, 1998, in the principal amount of
Two Million Three Hundred Ten Thousand Dollars ($2,310,000) executed by the
Indemnitors and payable to Lender (the "Note"); and

          2.  Deed of Trust dated August 27, 1998, executed by James L. Bildner,
encumbering that certain real property commonly referred to as Scenic Road 6 SW
of Ocean, Carmel, California 93921 (the "Deed of Trust") (the Note and Deed of
Trust being hereinafter collectively referred to as the "Loan Documents").

     B.  Whereas, James L. Bildner currently serves as a director and officer of
the Company.

     C.  Whereas, in order to induce James L. Bildner to continue to serve as a
member of the board of directors and/or as an officer of the Company, the
Company has agreed to execute and deliver to Lender a Guaranty, by which the
Company will guarantee to Lender the payment of certain indebtedness under the
Loan Documents.

     D.  Whereas, in the event of any default of the Indemnitors under the Loan
Documents, the Guaranty grants to the Company the right to make payments of the
indebtedness under the Loan Documents within a certain period from the date of
the Company's receipt of notice of such default and thereby cure such default.

     E.  Whereas, in order to induce the Company to execute and deliver the
Guaranty to Lender, the Indemnitors have agreed to execute and deliver this
Agreement to the Company.
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     THEREFORE, in consideration of the Recitals (which are hereby incorporated
into and shall be deemed a part of this Agreement), of the agreements hereafter
set forth, and of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by all parties, it is agreed by and
among the parties hereto as follows:

     1.  Indemnity. The Indemnitors shall at all times indemnify the Company
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against, and hold the Company harmless from, any loss, claim, action, cause of
action, liability, cost or expense, including without limitation attorneys' fees
and expenses, which the Company may at any time sustain, incur, or be answerable
for under the Guaranty and any renewal or extension thereof, including without
limitation any payment of any part of the Note or other indebtedness under the
Loan Documents which the Company may make from time to time to cure a default on
the part of the Indemnitors.

     2.  Security.  The indemnification obligations of the Indemnitors
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under this Agreement shall be secured by a pledge of Tier Technologies, Inc.
Common Stock owned by James L. Bildner, which pledge shall be evidenced
by a pledge agreement executed by James L. Bildner,  upon such terms and
conditions as are customary in security arrangements of a similar nature until
the obligations secured thereby have been satisfied in full (the "Pledge
Agreement").  James L. Bildner shall, promptly at the request of the Company,
execute any additional documents or do any act reasonably required by the
Company to cause the Pledge Agreement and all necessary instruments, to be
recorded, registered and filed in such manner and in such places as may be
required by law, and to take all such other action as may be required in order
to make effective the security interest intended to be created in connection
with the Pledge Agreement and with the priorities contemplated by it.  Nothing
herein shall be deemed to limit any of the terms or provisions of the Pledge
Agreement or any other present or future agreement between the Company and the
Indemnitors, and all of the Company's rights hereunder and thereunder shall be
cumulative.

     3.  Joint and Several Responsibility.  The obligations of the Indemnitors
         --------------------------------                                     
under this Agreement shall be joint and several.

     4.  Nonexclusivity.  The indemnification rights granted to the Company
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under this Agreement shall not be deemed exclusive of, or in limitation of, any
other rights to which the Company may be entitled under applicable law,
agreement, or otherwise, including without limitation any rights of subrogation.

     5.  Continuation of Indemnity.  All agreements and obligations of the
         -------------------------                                        
Indemnitors contained in this Agreement shall continue in force so long as the
Company 

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shall be subject to any and all possible losses, claims, damages, expenses,
costs, or liabilities under the Guaranty, regardless of whether any Indemnitor
is serving as a director, officer, employee or agent of the Company.

     6.  Amendments. Neither this Agreement nor any of its provisions may be
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changed, amended, modified, waived or discharged orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, amendment, modification, waiver or discharge is sought.

     7.  Successors and Assigns.  The rights granted to the Company under this
         ----------------------                                               
Agreement shall inure to the benefit of the Company, its successors and assigns,
and this Agreement shall be binding upon the  Indemnitors and their personal
representatives, heirs, executors, administrators and beneficiaries.

     8.  Severability.  In the event that any one or more of the provisions
         ------------                                                      
contained in this Agreement shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, the other provisions of the Agreement shall not
be affected, and the Agreement shall be construed as if the invalid, illegal, or
unenforceable provisions had never been contained in it.

     9.  Governing Law. This Agreement shall be deemed to have been entered into
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in, and pursuant to the laws of, the State of California, and shall in all
respects be governed by and construed in accordance with the laws of the State
of California, exclusive of its rules governing choice of law and conflict of
laws, and with applicable laws of the United States of America.

     10. Time of Essence.  Time is of the essence in the performance of all the
         ---------------                                                       
terms of this Agreement.

     11. Counterparts.  This Agreement may be executed in any number of
         ------------                                                  
counterparts, each of which shall be deemed to be an original, and all together
but one instrument.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first above written.


                                               /s/ James L. Bildner
                                           _______________________________
                                                   James L. Bildner

 
                                               /s/ Nancy J. Bildner
                                           ________________________________
                                                   Nancy J. Bildner

 
                                           TIER TECHNOLOGIES, INC.,
                                           a California corporation
  
 
                                           By: /s/ George K. Ross
                                              _____________________________


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