Key takeaways:

• • • Strategic focus is crucial 鈥� Firms with a clear, written strategy and marketing plan are out-earning peers, and vague ambition is no longer sufficient in today’s competitive tax industry landscape.

    • Advisory services drive growth 鈥� Advisory service lines, particularly investment advisory and proactive tax planning, are expanding faster than traditional compliance work, and firms must blend recurring compliance jobs with scalable advisory to smooth revenue cyclicality and deepen client relationships.

    • Technology and leadership are keys to success 鈥� Firms must harness the power of AI, automation, and private equity to drive growth, and prioritize leadership systems, professionalization of leadership, and culture by design to endure the next decade.

If the last few years felt like standing at a crossroads for tax, audit & accounting firms, 2025 is the turn itself. Consolidation, private equity, AI, and evolving workforce expectations have tipped the profession from gradual change into a full paradigm shift. The illuminates the state of the profession. The annual report on the tax industry shows that those firms that win from here won鈥檛 simply be competent 鈥� they鈥檒l be intentional, strategically focused, and relentless about converting capacity into higher-value client impact. For tax firm leaders, the mandate is clear: Make bold, data-informed choices now or wait and watch competitors outpaced you.

What the numbers are really saying

While revenue growth has cooled from the post-pandemic highs, settling near high single digits across the market, a striking share of that growth now is being powered by mergers and acquisitions, while organic expansion is proving harder to sustain. Meanwhile, income per equity partner has still edged upward, although profit growth lags revenue as costs, partner counts, and investment outlays rise.

The standout tax firms 鈥� especially those with higher billing rates and strong staff-to-partner ratios 鈥� are combing scale, leverage, and premium pricing to widen the gap between them and competitors. The message is clear: Profitable growth now depends less on squeezing more hours and more on getting the business model right.

Indeed, the report noted several areas in which tax firms leaders need to pay special attention.

Talent: Retention is better 鈥� but capacity isn鈥檛 the same as productivity

The report reveals turnover among tax professionals has fallen to its lowest level in years, which is a positive development. Yet billable hours per professional have declined, and many teams are logging less than 1,400 hours annually.

In response, some firms are hiring to build capacity, but revenue per full-time equivalent (FTE) employees slipped for the first time in five years 鈥� a signal that headcount without redesign is a blunt instrument. Offshoring and outsourcing remain in the toolkit, especially for larger firms, but as retention improves, the hiring mix is shifting from emergency capacity to structured, strategic resourcing. The imperative is smarter workload orchestration, not more bodies.

Strategy is no longer optional

Firms with a clear, written strategy and marketing plan are out-earning their peers, the report showed. That鈥檚 not correlation by accident 鈥� it鈥檚 the compounding effect of decisive prioritization. When leaders articulate where the firm will play and how it will win, then firm investments align with strategy, pricing reflects value, and teams understand how to move the needle. Having vague ambitions is expensive, precision pays much better.

Advisory is the growth flywheel

Advisory service lines 鈥� particularly investment advisory and proactive tax planning 鈥� are expanding faster than traditional compliance. The most resilient firms are shaping portfolios that blend recurring compliance jobs with scalable advisory roles, thus smoothing revenue cyclicality and deepening client relationships. Technology is central here because it doesn鈥檛 just compress the cost of compliance work, it liberates capacity that can be redeployed into offering advice for which clients will happily pay a premium.

Private equity & technology: Forces to harness, not fear

Private equity (PE) is no longer an outlier, it鈥檚 reshaping governance, accelerating M&A, and boosting tech investment across the top end of the market. Whether you choose to partner with PE firms or compete against PE-backed platforms, you must operate with PE-grade rigor 鈥� and that means sharper KPIs, faster decision cycles, and a clearer capital allocation model.

On the tech front, AI and automation clearly are transforming tax preparation, workpaper assembly, and research 鈥� often eliminating 50% to 80% of the manual steps in defined use cases. And the top performing firms don鈥檛 just use AI just to cut costs, they turn their teams鈥� freed-up hours into advisory projects, client education, and proactive planning conversations that can fortify loyalty and margins.

Leadership & succession: Redesigned for durability

Today, partner demographics are shifting quickly. There are more younger partners, more women advancing, and more diverse paths into leadership. Non鈥慹quity roles and flexible buy鈥慽n models are becoming standard, while mandatory retirement policies are moderating to support smoother succession.

Compensation and buyout systems are maturing as committees and transparent formulas replacing opaque, personality鈥慸riven decisions. The firms that will thrive over the next decade already are professionalizing leadership the same way they professionalize client service.

The bottom line

Finally, there are several actions that smart tax firm leaders are already abandoning and others that they are strongly focusing on.

What to stop doing

• • • Managing to utilization alone 鈥� Leaders need to shift their thinking to revenue per FTE, realization, and cycle time to reflect true performance.
    • Treating offshore resources as a plug鈥慳nd鈥憄lay fix 鈥� Integrate these resources into your firm鈥檚 standard processes with clear ownership and quality assurance.
    • Waiting for 鈥減ost鈥憈ax鈥憇eason鈥� to improve systems 鈥擨mprovement is a year鈥憆ound muscle that needs to be exercised. Schedule and track system improvement it like any client deliverable.

What to double down on

• • • Focusing on client segmentation and ideal鈥慶lient fit 鈥� Politely winnow misaligned work or burdensome clients and reinvest those hours into high鈥憄otential relationships.
    • Promoting manager leverage 鈥� Equip managers with the ability to own scoping, pricing, and coaching so partners can drive market鈥慺acing growth.
    • Encouraging culture by design 鈥� Flexible work is table stakes in today鈥檚 environment. Promote what differentiates your firm, especially its clarity of mission, feedback cadence, and recognition systems.

The tax, audit & accounting profession鈥檚 fundamentals remain strong, but the rulebook has been rewritten, as the Rosenberg Report illustrates. Firm growth will increasingly come from strategy, not inertia; from advisory impact, not additional hours; and from leadership systems, not individual heroics.

Smart tax firm leaders need to treat 2026 as a pivot year for their firms. Publish the plan, price to value, operationalize AI, and convert freed-up capacity into advice offerings your clients can鈥檛 imagine running their businesses without.

Those tax firms that move first, while measuring what matters, will define the next decade of tax leadership.

For more on the current state of tax, audit & accounting firms, check out the recent 2025 State of Tax Professionals Report from the 成人VR视频 Institute here

Of course, the big but is that all of this profitability is happening while many tax & accounting firms are still experiencing staffing shortages and a pronounced skills gap, using outdated technology, and facing stiff competition.

To better understand the industry trends and developments discussed in this year鈥檚 Rosenberg Survey, we spoke to Allan Koltin, of , whose insights were included in the report.

成人VR视频 Institute: For years now we鈥檝e been talking about staffing shortages in the accounting profession due to retiring Baby Boomers, job-hopping executives, and not enough young talent coming up. In the Rosenberg Survey, you warn that young people who don鈥檛 want to do compliance work may be dissatisfied and skilled talent could leave if they aren鈥檛 getting enough challenging work. Is the outsourcing/offshoring trend helping or hurting this situation? And is there anything tax & accounting firms can do to break this cycle?

Allan Koltin: Yes, firms are investing deeply into offshoring, and I think it鈥檚 pretty fair to say that 20% to 25% of future revenue will be done offshore. Another piece will be mundane compliance work that鈥檚 done by machine learning, artificial intelligence (AI), and various types of bots. But what nobody wants to talk about is the why. Why aren鈥檛 young people going into accounting? It鈥檚 happening because kids today have a thousand different opportunities for what they can do, and most of them offer quicker advancement, more challenging work, and higher salaries.

The accounting profession has a public relations problem. Over the past couple of years there has been more than a 10% drop in the number of accounting majors coming out of college, so if we think we鈥檙e just going to keep getting talent like we historically have 鈥� well, it鈥檚 just not there. Some firms are reaching all the way into high schools now to try to paint a picture of what the profession is.

What I don鈥檛 think we do enough is highlight successful accountants in public accounting and private industry. Lots of accountants have done incredibly well in business and have been very successful in a whole variety of things, but we don鈥檛 talk about that 鈥� and we have to start, because today鈥檚 generation wants something more than just a job.

The accounting profession has a public relations problem…聽聽What I don鈥檛 think we do enough is highlight successful accountants in public accounting and private industry.

The other message that we need to send to colleges and universities is that because of technology, AI, and offshoring, young accountants are going to get pushed into the fire sooner. And it鈥檚 a good fire 鈥� more client contact, more challenging, more interesting work sooner in your career. And from a PR standpoint, we have to show success. We have to show what the upper 5% in our profession does, which is no different from what other industries do, whether it鈥檚 law, financial services, investment banking, private equity, or whatever. It鈥檚 just that they all have sexier and more appealing labels on them right now.

成人VR视频 Institute: Another trend discussed in the report is that of accounting firms hiring non-CPAs to fill the talent gap. But if you aren鈥檛 a CPA, what sort of skillset is desirable to get hired at a large accounting firm?

Allan Koltin: If you look at the latest numbers, 27% of all new hires in public accounting last year were non-accountants. What are they hiring? They鈥檙e hiring people in STEM 鈥� people with science, technology, and engineering experience. I think the feeling today is that you can train people to do what you need them to do. That鈥檚 not to say that an accounting degree is unimportant 鈥� it is. But I’m sure there was a time not too long ago when non-accountants were 5% of hires. Then it was 10%, 15%, 20%, and now 27%. My guess is that in a year or two, it will be 33% to 35%.

成人VR视频 Institute: Many accounting professionals interviewed for the report mention the need for firms to move beyond compliance and offer a wider range of advisory services. What advisory services are getting the most traction now?

Allan Koltin: Anything that involves client accounting services is on fire 鈥� it’s growing by double-digits everywhere. Outsourcing of any kind: outsourcing of accounting, tax, technology, HR and payroll, even the chief financial officer suite 鈥� these are all rapidly growing areas. Anything having to do with technology, anything that has cyber in or around it is exploding and growing. Anything that has industry specialization, where you can provide business advisory and consulting services to those industries on something beyond a financial statement or tax return.

Specialized tax solutions are hot 鈥� in the area of wealth management or financial services, for instance, or estate and trust planning, business valuation, transfer pricing, or state, local, and international tax work. On the consulting or advisory side, it鈥檚 anything that can create value.

成人VR视频 Institute: The growing use of artificial intelligence in accounting is another hot topic. Many agree that AI has some practical applications, but many are also still skeptical, and others are in 鈥渨ait-and-see鈥� mode. How do you think the use of AI in the accounting profession is likely to evolve in 2024?

Allan Koltin: To me, the usage of AI is a slow boil, but I do see progress every year of specific bots and AI 鈥� not just in tax and audit, but in more industry-specific applications. If a firm is involved in auto dealerships, for example, they have developed software around it, and if they鈥檙e manufacturing, it鈥檚 the same thing. It鈥檚 more niche driven. The big aha moment for me is that they鈥檝e always been creating things in the tax and audit world, but now AI development is more specialized and more narrowly focused on individual industries.

成人VR视频 Institute: There is also much discussion in the report about the recent involvement of private equity and alternative investors. Did private equity deals in 2023 shake out the way you anticipated?

Allan Koltin: Unfortunately, 2023 was the year that private equity was put on hold. I think 2024 will be what we thought 2023 would be, and the simple reason for that was the cost of debt. With interest rates doubling and a looming recession, some of the larger accounting firms with a big transaction advisory practice weren鈥檛 doing a lot of deals. Lots of the big deals that were anticipated to take place in 2023 got pushed out to 2024. So, the feeling is that next year rates will decline, and firms will come back to the table.

成人VR视频 Institute: Profitability was up significantly in 2023. Do you think that trend will continue in 2024?

Allan Koltin: True, 2023 was a great year 鈥� but we’re living in this artificial world right now, where we’ve done more rate increases in the last two to three years than we’ve ever done before. And that鈥檚 because we have a capacity problem.

We’re doing what we always knew we should, and that’s to spend more time on our A clients, or converting our B clients into A clients and doubling the rates on our C clients, and if they leave, they leave. Every day somebody tells me a story about how they took their 1040 compliance practice and doubled the rate. Half the clients left, and half stayed. Now you have the same revenue but half the work, right?

So, we’re in this bubble right now of doing things we always knew we should be doing, and we’re actually doing them. The but is that we’re all working insane hours because the work is there, but we don鈥檛 have enough bodies. So, in the short term, life is great 鈥� except that we still don’t have a sustainable model, save for a few large firms that have figured it out.

The , an annual study of the CPA industry in the U.S. that鈥檚 published by consulting firm聽, took a look at the changing complexion of accounting firm ownership 鈥� driven by a need for capital that has raised interest among private equity firms 鈥� and the profession鈥檚 long-anticipated move toward more advisory work. (The latest survey, released in late-September 2022, relies mostly on data from the year previous.)

We spoke to Allan D. Koltin, CEO of Koltin Consulting, who contributed his insight to the report, in order to better understand these larger challenges that the accounting industry must begin to address in the coming year.

成人VR视频 Institute: In the report, you spoke about the changing face of accounting firm ownership with the acceleration of private equity involvement and mergers & acquisitions. How do you think this will all shake out?

Allan Koltin: Clearly, this kind of change is happening in the industry, in the sense of how a larger number of accounting firms are willing to approach the market and look at strategies, such as mergers or combining with private equity firms.

It’s crazy 鈥� two years ago, I didn’t have one private equity client. Today I have more than 40, and every single one wants to enter the accounting profession. I was warned about this, as the saying goes: If one breaks the code, everyone else will want in.

Of that group, one-third only want to talk to the top 25 accounting firms (those with annual revenue of $300 million or more) 鈥� these are the heavyweights. The middleweights, they鈥檙e interested in accounting firms with revenue between $100 million and $300 million; and the welterweights are looking at firms with revenue between $10 million and $100 million. When you look at this picture and assume deals are going to happen with firms of all sizes, you will have a completely transformed profession within the next two years.

Unlike the consolidators of the late-1990s that only talked to the largest firms, today鈥檚 private equity firms appear to be talking to everyone 鈥� with one caveat: The targeted accounting firm has to be uber-profitable. The harsh reality that many accounting firms are finding out is that if you are not profitable, you won鈥檛 鈥渜ualify for the loan鈥� because the model that private equity firms are using today requires a give-back of partner compensation, and if the firm doesn鈥檛 have excess profitability, your ultimate enterprise won鈥檛 be that high.

In the late-1990s, public companies like CBIZ, H&R Block and American Express entered the accounting industry as CPA acquirors, of those only CBIZ made a lasting go of it. What the other big consolidators ultimately found out was that their program was great for the old guard, who could immediately monetize their goodwill, but for the younger professionals there wasn鈥檛 much stickiness keeping them with the organization.

Enter today鈥檚 private equity firms, which came in saying, What can we do to make this work for the younger partners? They also put something new on the table, a new type of currency called rollover equity, which became a game-changer for those younger partners.

成人VR视频 Institute: How does that work?

Allan Koltin: The way that works is that the younger you are, the more rollover equity you’re going to get. So, the older group gets cash, and the younger group gets some cash but more rollover equity.

It鈥檚 a new generation today. When I talk to a 35-year-old partner, they said that under the old deal, they鈥檇 have to stay until they鈥檙e 65 to unlock the first $1 of deferred compensation, and then get small payments for 10 years after that 鈥� and that money would then be taxed as ordinary income. And if you look at the present value of that number today, they add, it’s 鈥渘ot even lunch money鈥� 鈥� and that鈥檚 assuming both the firm and the profession are still around in 35 years.

Under today鈥檚 private equity deal, they would likely to get a substantial check with capital gains treatment right away, and then get another in three to five years, provided the firm hits some basic EBIDA performance goals. Then, in years five to seven, when the private equity group sells its investment, these partners would get a third bite of the apple by deciding whether to sell as well. In fact, their rollover equity would be pari passu, giving them the same rights and opportunities as the private equity group itself.

That means, at the young age of 40-something, these partners can have money in the bank and then decide if they want to cash out further or rollover their investment into the next private equity fund.

成人VR视频 Institute: As we discussed in the first part of our interview, the report called technology the linchpin of almost every other discussion point in the report. But you said it may be difficult to address the technology question without first addressing the capitalization question. In short, where is the money for tech investment going to come from? Is this what is driving the push toward merger and private equity solutions?

Allan Koltin: Exactly, this is a big reason why a private equity firm is in these discussions today. The need for tech investment and digitization at many accounting firms 鈥� what I call the fourth industrial revolution 鈥� is hitting the accounting profession right between the eyes. Compliance-only shops won’t survive this because technology is replacing them. Further, this comes at a time when the younger generation of accountants is pushing back on performing the mundane work that they are often required to perform, making technology even more of a must-have.

That has firms realizing that they will need more capital to operate 鈥� so they鈥檙e looking for that capital. And that leaves them wondering if they should use their own capital and accept lower partner compensation, go to the bank and add debt to the balance sheet, or seek an investment from a private equity firm.

Every firm should engage in a simple strategic planning exercise to assess their capital needs and the vision of what they want to build. Do they want to build a firm of the future? Or just milk the firm they have until they can no longer do that. Look at your talent, look at the changes happening in your part of the industry, and figure it out.

Once you conduct this exercise, you may be open to the idea of combining with somebody bigger, which could be private equity firm or a larger CPA firm, if they are culturally and strategically aligned with your firm and are built to last, meaning they are profitable and have built out the suite of consulting or advisory services that clients want and need. It also means that they have deep pockets to continue to invest in the talent, technology, and transformation needed to be successful in today鈥檚 market.

成人VR视频 Institute: Speaking of that, the report also noted that the long-anticipated move toward more advisory work, rather than just compliance work, was quickening. In your opinion, is it moving fast enough? If not, what can firm leadership do to accelerate it?

Allan Koltin: There’s an expression I use, The operation was successful, but the patient died 鈥� and I think that’s what’s going on in the accounting profession.

At the base of it, tax & accounting firms create two products 鈥� audits and tax returns 鈥� that clients, if you think about it, don’t necessarily want but surely need. What’s happened now, however, is there is some separation in the marketplace because a lot of firms are investing deeply in creating the firm of the future, one versed in consulting & advisory and outsource-related services.

Firms should ask their clients what they want 鈥� clients don’t care about tax returns, they want real and meaningful tax planning, whether we call that estate planning, wealth preservation, personal financial planning, or anything else in that suite of related services.

Too many accountants and their firms are still stuck in the old way of grinding out compliance products. But eventually, this work will be commoditized, and the hours spent doing it will begin to evaporate. Still, too many are blind to the situation at hand, in part because the feeding at the trough right now is really good, and many firms have had back-to-back years of profitability. (Although most partners will confess that they鈥檙e wearing themselves out with working hours because they can鈥檛 find the talent to help with the work.)

Yet despite the good times, if your firm is not investing deeply in talent, technology, and the transformation of your business, then in a couple of years you’re going to have a big problem.