The “2026 State of Tax Professionals Report” shows broad revenue confidence across the profession — and a clear pattern in which that growth is stalling before it reaches the bottom line
Key takeaways:
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Almost two-thirds of tax firms expect revenue to grow in 2026 — However, the top two revenue drivers — fee increases and organic client acquisition — both have natural ceilings. Sustainable growth requires moving beyond these transactional levers toward strategies that don’t plateau.
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Advisory services are the profession’s most in-demand category and its lowest-margin one — This a pricing problem, not a demand problem. Firms that shift to value-based or fixed-fee pricing for advisory work, rather than billing it hourly alongside compliance, consistently report stronger margins over time.
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More than half of firms are expecting leadership transitions by 2030 — Succession is now a growth variable, not just an HR one. Firms that treat it as a strategic priority now are better positioned to maintain momentum through leadership changes.
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The headline numbers from the recent Thomson Reuters Institute’s “2026 State of Tax Professionals Report” — which surveyed more than 600 tax professionals worldwide — are strong. Profit margins across tax, audit & accounting firms averaged above 30% throughout 2025, nearly half of all firms saw profits rise, and two-thirds expect revenue to increase again over the next 12 months.
For most firm leaders, this represents a genuine shift in conditions after years of talent pressure and compliance commodification.
However, a deeper dive in the data shows is that revenue growth and margin growth are not moving in the same direction for most tax firms. The gap between the two is where the profession’s real growth challenge sits and understanding it is where the more useful conversations start.
What is actually driving tax firm revenue growth?
The two biggest revenue drivers cited in the report are fee and rate increases (with 23% of respondents saying this) and organic new client acquisition (22%). Both are proven levers, and both have limits. Fee increases work until clients push back or competitors undercut; and organic acquisition stalls when capacity runs out. Neither of these methods on their own addresses whether firms are growing in ways that actually improve their long-term margin picture or are simply doing more of the same work at a slightly higher price.
The report flags this directly, noting that firms “see growth itself not as a strategy, but rather as a goal,” and that the method chosen to fuel it “will determine the strategy necessary to achieve it.” That distinction — between growth as a goal and growth as a strategy — is where firms that sustain momentum tend to separate from those that plateau.
Why are advisory services the lowest-margin work in the portfolio?
Almost three-quarters (74%) of respondents surveyed say most clients strongly want a trusted advisor relationship that goes beyond basic tax filing. And firms are responding — when asked which services their firm plans to start offering to clients in the next 12 months, almost two-thirds of respondents (65%) say their firm is either planning to offer or considering offering tax strategy advice.
Clearly, the pipeline for advisory work is being built, but the margin data tells a different story about what happens once those services are actually delivered.
The report’s diagnosis that the “advisory pricing gap is not caused by lack of demand — the root cause is lack of confidence in the value of the services provided.” Firms using value-based or fixed-fee pricing for advisory work report stronger margins over time, with margins above 31%. Packaging advisory work into defined service tiers, rather than billing it hourly alongside compliance, makes the value more legible to clients and easier to price consistently.
Is talent shortages limiting firms’ growth potential?
More clients, more advisory services, and more complexity all require more capacity; and 40% of respondents say their firm’s capabilities are currently constrained or at risk because of talent issues. For midsize tax firms — those with between 4 and 29 professionals — that number climbs to 51%. This constrained capacity can severely limit which services a firm can offer, how many new clients can be absorbed, and how quickly advisory expansion can actually happen.
Hiring alone is not the answer. Those firms managing this challenge the most effectively tend to combine task reallocation — moving non-advisory work to junior staff — with structured internal development programs that build the type of advisors they need rather than trying to hire them.
Which structural decisions will determine growth through 2030?
More than half (51%) of respondents say it is likely or highly likely that one or more partners or firm leaders will retire or leave before 2030. Most expect to fill those roles internally, with only 27% thinking outside partner recruitment is likely. Firms are also genuinely split on whether they stay the same size and structure over the next five years, or change via mergers, acquisitions, or outside capital infusions.
These are growth decisions even when they don’t look like it. As the report notes, “growth is not a universal imperative” — indeed, some firms will deliberately choose resilience over scale, and that is a legitimate path. The firms that tend to struggle are those that have not made the choice explicitly and instead find it made for them by departing partners, capacity limits, or competitors that moved faster.
For tax, audit & accounting firms, the revenue conditions in 2026 are as favorable as they have been in years — revenue is up, clients want more services, and the profession has more tools available to deliver that expanded service.
Those tax firms that convert these current conditions into lasting growth will be the ones that have matched their ambition with a strategy that’s specific enough to act upon.
You can download a copy of the Thomson Reuters Institute’s 2026 State of Tax Professionals Report here
