The 2025 tax season presents unique challenges for tax professionals as they navigate potential policy changes and the expiration of key provisions in the TCJA
Most tax professionals still remember going into the 2018 tax season with much trepidation. The 2017 Tax Cuts and Jobs Act (TCJA) had been enacted, and many tax professionals experienced the most significant policy changes they had seen over the previous 30 years.
Today, with 2024 in the rearview and the new tax season on the way, 2025 may be another pivotal year for tax professionals. As they are working with clients to prepare their 2024 taxes, tax professionals also will have to balance some future planning alongside it.
With several provisions of the TCJA set to expire at the end of 2025, tax professionals have to now think through a lens of how some potential expirations could impact clients in 2026 and beyond. With a new party taking over the presidency and both houses of Congress, the likelihood is that most of the provisions set to expire ultimately will not. However, because many discussions will have to be had about the costs of planned tax cuts, there are several factors to consider — and what the final legislation will look like could make quite a difference.
While it’s a gross understatement to say regular tax seasons are hectic for tax professionals, the looming possible changes in the coming season can, for some, create more dread, especially as the industry continues to be plagued by the lack of talent. The potential for more work in the coming season is like the straw that could break the camel’s back.
To help mitigate this, here are some practical tips to not only survive the coming 2024 tax season but also potentially put tax professionals in a position for expanded business growth and opportunities.
Reviewing and updating client strategies
As clients begin to deliver their 2024 financials, this could be an excellent opportunity to review their financial activities over the past year and closely look at what has changed. It is also essential to ask about potential changes in the upcoming 12 to 24 months.
However, how best can tax professionals capture this information? One simple way could be to update your tax return checklist, perhaps adding a note about tax planning and a few questions about future financial considerations. If the firm doesn’t already offer this service, this could be the most straightforward way to begin querying clients about their need for advisory services — and then, begin a plan to offer those.
On the surface, of course, it may not seem like an ideal time. In reality however, it is the perfect time because you will be interacting with clients regarding current taxes, and they will be more open to talking to you about future financial plans given that they’re already thinking about the coming year and beyond. Indeed, there isn’t a single news article that hasn’t commented on the potential expiring provisions of TCJA and their potential impact on taxpayers — so most clients are already aware.
While it’s a gross understatement to say regular tax seasons are hectic for tax professionals, the looming possible changes in the coming season can, for some, create more dread, especially as the industry continues to be plagued by the lack of talent.
In fact, it is essential for tax professionals to seize this opportunity with their clients now. Even if your tax & accounting firm doesn’t formally have an advisory practice and it was something you planned to offer in 2025, the coming tax season gives you the gift of a low stakes start.
By using your tax expertise and the knowledge of your client’s financials to provide them with a few scenarios to consider or rethink could put you on the path to become a trusted advisor.
Not all of your clients may require or want tax planning, however, but this time also provides you with the opportunity to re-evaluate your firm what it needs to do to remain competitive. Ask yourself, what should our firm look like going forward? In short, what is your firm’s plan for future growth?
Is the current business model in which most or all of its revenue comes from doing tax returns ultimately sustainable, especially with the continued pressure of competition on tax compliance? For those firm leaders questioning that sustainability, there may be a ready solution.
Enhancing technological capabilities
Now more than ever, technology is pivotal in improving the effectiveness and efficiency of tax preparation and planning. In fact, tax firm leaders have said technology is a necessary component of their firm’s business strategy, according to a recent survey on tax firm technology. At the same time, however, there has been a delay between thinking about purchasing needed technologies and actually moving the ball on budgeting and action to do it. According to the Thomson Reuters Institute’s State of the Tax Professional Report, on average, only 40% of tax & accounting firms have at least one-quarter of their workflow automated.
By using your tax expertise and the knowledge of your client’s financials to provide them with a few scenarios to consider or rethink could put you on the path to become a trusted advisor.
Those firms that understand and effectively make changes are positioning themselves to better survive and thrive through the coming tax season. Yet, many firms still face multilayered dilemmas — some lack the necessary technologies, for example, while others have sufficient technology but lack their staff’s buy-in, likely because they failed to train staff and maximize the use of the technology. Regardless of where firms sit on this spectrum, according to the survey, almost all recognize that to keep up with regulations, gather and analyze clients’ information, and work more efficiently, more technology is required, especially with the impact of AI and generative AI potentially altering how tax work gets done.
Finally, it’s worth noting that while staying informed on tax laws and regulations is incredibly important for tax professionals, clients also will rely on their tax professionals’ expertise to help make sense of all the tax noise in the media and how it matters to them personally. Proactively, tax professionals should provide updates to clients — either individually or as a group (using newsletters or client memos, for example) — on how proposed changes may impact them. Again, this is an opportunity to strengthen current client relationships and create opportunities to acquire new business and new clients.
Clearly, the 2025 tax season presents unique challenges and opportunities for tax professionals. By staying informed, leveraging technology, and maintaining open communication with clients, tax professionals can confidently navigate these potential policy changes.
By preparing now, tax professionals can ensure a smoother tax season, strengthen client relationships, and enhance the overall value of tax services.
You can learn more about the challenges facing tax professionals here.
