Resource pressures are intensifying for corporate tax departments, yet emerging opportunities in technology adoption, transferable tax credits, and federal tax reform offer pathways to deliver measurable value
Key takeaways:
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Advocate for investment in technology and talent — As compliance and strategic demands grow, tax departments should use benchmark data from industry reports to build compelling business cases for automation, generative AI, and additional headcount.
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Explore transferable tax credit opportunities — The transferable tax credit market has matured significantly, more departments should pursue these to offset tax liability, reduce estimated quarterly payments, and free up cash flow.
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Proactively manage the OB3 transition — The One Big Beautiful Bill Act introduces substantial federal tax changes requiring strategic planning for 2026. Document analysis carefully as state conformity issues create future audit exposure.
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The corporate tax landscape in 2025 is defined by resource constraints, regulatory complexity, and rapid technological change. And many corporate tax department leaders face mounting pressures from compliance demands, talent shortages, and evolving legislation — all while being asked to deliver more strategic value to their organizations, according to the 2025 State of the Corporate Tax Department Report, published by the Thomson Reuters Institute and Tax Executives Institute.
Under-resourcing and strategic gaps persist
Perhaps the most striking finding from the 2025 report is that 58% of corporate tax department professionals said their departments are under-resourced — an increase from 51% who said that the previous year. This apparent deterioration in resourcing creates cascading risks for businesses. Departments facing resource constraints report higher rates of penalties and audits, with 44% of survey respondents saying their under-resourced department experiencing penalties in the past year and 12% saying it had faced penalties exceeding $1 million.
The good news is that more departments are planning to hire rather than rely on overtime from existing staff, the report shows. However, the talent pool remains tight, making recruitment challenging. For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.
For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.
The report also showed that corporate tax departments continue to struggle with an imbalance between strategic and tactical work, with in-house tax professionals noting that they spend the majority of their time on reactive, tactical tasks while ideally wanting to reduce this to approximately 30% to 38% of their time.
What’s holding teams back? Excessive workload volume tops the list, they said, followed by complex compliance requirements, limited resources, and outdated technology. While two-thirds of respondents said their departments are still in the chaotic reactive stage of technology maturity, more than half said they expect higher-than-normal budget increases for investment in tax technology in the coming year, with many beginning to incorporate generative AI (GenAI) into their workflows.
Opportunities to create value exist
While these challenges exist, there are ways that corporate tax departments can identify and pursue value in the coming year. For example, the passage of the One Big Beautiful Bill Act (OB3) in mid-2025 introduced substantial changes to federal tax provisions including the ability to immediately expense research and experimentation costs under Section 174, reintroduction of full bonus depreciation, and liberalized interest deduction limitations.
The new Section 904(b) rules significantly improve the foreign tax credit mechanism by eliminating the allocation of interest expense and research and experimental (R&E) expenses to foreign source income, potentially lowering effective tax rates from 18.9% to approximately 14% at the aggregate level.
Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments.
However, OB3’s retroactive application to tax year 2025 creates immediate compliance complexity. State conformity issues compound the challenge, as many states have not yet updated their codes, creating potential mismatches between federal and state taxable income calculations.
Further, the transferable tax credit market has matured significantly, with nearly 25% of Fortune 1000 companies now participating, which is a 60% increase over 2024. Current market conditions favor buyers, with investment tax credits and production tax credits trading at discounts of 89-cent to 91-cents on the dollar.
These credits can offset tax liability, reduce estimated quarterly payments, and free up corporate cash flow. Tax departments should explore this opportunity as another tool for creating measurable value for the business.
Planning for 2026 and beyond
Despite the challenges facing corporate tax departments in 2025, success stories abound. Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments. The key is making the case for investment, staying ahead of regulatory changes, and continuously communicating your added value back to the business.
You can download a full copy of the 2025 State of the Corporate Tax Department, from the Thomson Reuters Institute and Tax Executives Institute, here
