The newly released “2026 State of Tax Professionals Report” finds that tax, audit & accounting firms are well-positioned to help their customers navigate the disruptions and uncertainties of the current business landscape
Key takeaways:
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Profits continue to be strong — Most tax & accounting firms saw revenues and profits increase in 2025 despite a chronic talent shortage and other systemic challenges.
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Optimism around AI adoption — Tax professionals are generally optimistic about AI-enhanced technologies, and their firms are backing their optimism with unprecedented levels of investment.
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Expansion of advisory services — Firms are expanding their advisory service offerings to clients in such areas as tax strategy and business consulting, fueling growth and providing opportunities for competitive differentiation.
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Tax, audit & accounting firm professionals have been concerned for years that the one-two punch of do-it-yourself tax software and automation might eventually erode the value of —and demand for — their services. However, according to the Thomson Reuters Institute’s “2026 State of Tax Professionals Report”, which surveyed more than 600 tax professionals worldwide, firms of all sizes are adapting remarkably well to the current era of rapid technological change and political upheaval.
Indeed, tax professionals surveyed say that, in addition to traditional tax preparation, their customers want and need more advisory services, a trend that has been gaining momentum for several years. In response, many firms are continuing to expand their service offerings in the areas of tax strategy, business consulting, decision support, and financial planning — especially at larger firms with more abundant resources.
The result of this gradual shift in service offerings is that profit margins for tax & accounting firms worldwide averaged about 30% in 2025, with some firms registering profit margins of more than 40%.
Efficiency and growth were top strategic priorities
When asked about their top strategic priorities for the coming year, survey respondents cite efficiency and promoting firm growth as the top factors on the strategic agenda for 2026, even more emphatically than they did in 2025.
Further, they see that making more and better use of technology is still the most immediate path to greater efficiency, which is why introducing additional automation and AI — or just trying to get the most out of a firm’s existing technology stack — was also mentioned as an important focus for the upcoming year.
Still searching for solutions to talent challenges
Challenges still abound, however. An anemic pipeline of new talent and the ongoing retirement of senior personnel are among the top barriers to progress and profitability at many firms, the report indicates. The report also notes that the resulting competition for qualified candidates leads to overwork, skills gaps, and capacity restraints, all of which can impede a firm’s ability to compete and grow.
Many respondents say their firms are using multiple strategies to address these issues, including more targeted training, career development, outsourcing, task reallocation, and automation. Competition for top talent is intense, nevertheless; and the report shows that midsize tax firms may feel the talent squeeze harder than others, chiefly because larger firms can offer higher salaries and more career opportunities to retain top talent.
Another way firms are addressing their talent challenges is by automating more tax processes and workflows; however, the report also suggests that many firms have reached the point in their technological maturity at which it may be more difficult to identify additional processes to be automated. As a result, these firms find themselves in somewhat of a holding pattern, unable to advance technologically because of unyielding systemic and cultural impediments.
Meanwhile, many larger firms have already built the technological infrastructures they need to support more advanced forms of automation and data analysis. Now, the report reveals, these firms are shifting their focus to make better use of workflow-enhancing tools that can enable more efficient operations, expand their firm’s capabilities, and serve as a competitive differentiator.
Not surprisingly, the conversation around AI is heating up as well. While tax professionals may not be so interested in public chatbots such as Claude and ChatGPT, their attention is directed toward the many ways in which AI can enhance the tools they already use and how intelligent deployment of these tools can benefit their firms. Indeed, AI was the only category of technological investment which experienced year-on-year budget growth, the report shows.
Overall, the “2026 State of Tax Professionals Report” offers invaluable insight into where tax professionals see their firms and their industry now, shedding light on how the world’s top tax leaders are advancing the profession.
You can download a free copy of the full Thomson Reuters Institute “2026 State of Tax Professionals Report” by filling out the form below:
