A new Thomson Reuters Institute report examines how tax, audit & accounting firms are using technology to gain efficiencies, spur growth, and improve client service
For years, tax, audit & accounting professionals have wrestled with the contradictions of using technology to automate tax-preparation processes that were traditionally the bulk of an accountant’s daily work and wages. Now however, firms are relying on technology more than ever to supercharge their businesses and compete for high-value clients in an ultra-competitive field, according to the Thomson Reuters Institute’s newly released 2025 State of Tax Professionals Report.
This annual report surveys hundreds of accounting professionals from around the world to gain insight into their top priorities and biggest challenges, as well as what actions they’re taking to meet those challenges.
A profitable year
In the 2025 report, it’s clear that tax, audit & accounting firms have accepted the fact that certain types of routine tax work can and should be automated. Leaning on technology in this way has allowed firms to diversify their service offerings to clients into such areas as tax strategy and business consulting — key services that clients have been requesting and for which they are willing to pay top dollar.
And the strategy is working. According to the report, firms worldwide recorded an average revenue gain of 21.3% in 2024, resulting in an average profit rise of 25%.
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Tax, audit & accounting firms still have plenty of challenges, however. According to the report, the most formidable challenge that firms are facing is attracting, hiring, and retaining quality talent. And causes of this talent shortage are many-fold, according to survey respondents, as are the strategies firms are using to fill skills gaps and enable senior staffers to make more efficient use of their time.
Beyond talent, the other challenges that respondents cited included keeping up with rapidly changing regulations and tax law and enacting better time management. And while technology is seen as a good solution to many of these challenges, it comes with its own difficulties. The time and effort spent learning and using new technologies is one obstacle. Another challenge is how to properly incorporate AI-driven tech solutions so that they complement firms’ existing technologies and provide the most benefit possible.
Top priorities for 2025
The report also explores in depth what priorities accounting firms are focusing on in 2025 and their strategies for achieving the goals they have set for the year.
As in past years, the top priority for accounting firms in 2025 is improving operational efficiency, primarily through more strategic use of various technological resources. This year’s analysis is a bit different, however, because technology isn’t being used just to create more efficient workflows — it is being deployed strategically to improve profitability.
Indeed, almost half (49%) of the survey’s respondents report that technology figures heavily in their plans to improve profitability. More lucrative services and greater responsiveness to clients are the primary ways in which modern tax technologies are contributing to the bottom line, according to respondents. The success firms are having with such strategies is also why, according to the report, the only budget item to see a significant increase in 2025 is investment in AI.
Respondents also cited other priorities, including a focus on firm growth and expansion of the client base, along with an expansion and improvement of client service offerings. Many firms are also exploring various pricing options that clients may prefer.
The push for growth
Another major theme of this year’s report is how firms are engaging in an aggressive push for growth, especially among midsize and larger firms. Again, technology is at the heart of this desire for growth, because it makes the imperative to grow both necessary and possible: necessary because competition for high-value clients requires a broader range of services that are enabled by superior tax technology; and possible because modern tax technologies and data-analysis tools now allow firms to provide higher-value advisory services to their clients.
Of course, this path to growth will require firms to ask themselves some deep questions, such as: Which additional advisory services are the most profitable for them? Beyond expanding client-desire advisory services, what new services can firms offer in the coming year? And how will technology impact the competition for high-value services and key clients?
As growth and technological innovation become even more intertwined today, the report shows that tax, audit & accounting firms that can successfully integrate AI-driven technology to improve their operations while strategically competing for high-value clients are the ones that will flourish in the time ahead.
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