Key takeaways:

• • • Employees face contradictory messages or none at all 鈥� Nearly 40% of professionals surveyed report receiving conflicting directives about AI usage from clients and leadership, while half report no client conversations about AI have occurred at all.

    • Workers lack feedback on whether their AI efforts matter 鈥� Professionals who are experimenting with AI tools without knowing if their efforts are valued are left uncertain about whether investing time in developing AI skills is worth it.

    • Job displacement fears are rising 鈥� While employees remain cautiously optimistic about AI usage in their workplace, concerns about job displacement have doubled over the past year.

As generative AI (GenAI) tools flood into legal and accounting workplaces, organizations are deploying powerful technology without giving their employees clear directions on how to use it. Worse, some have received no guidance.

New research that underpinned the recent 2026 AI in Professional Services Report听from the 成人VR视频 Institute (TRI), reveals a disconnect between AI availability and organizational guidance, which is creating confusion that may undermine both employee experience and the technology鈥檚 potential value. (The report鈥檚 data was gathered from surveys of more than 1,500 legal, tax, accounting, and compliance professionals across 26 countries.)

Employees navigate inconsistent AI policies or none at all

Approximately 40% of the professionals surveyed said they received contradictory guidance from clients and leadership about AI tool usage, with directives both encouraging and discouraging their use on projects and in RFPs. This ambivalence is slowing down decision-making at the front lines 鈥� a place in which AI could deliver the most value.

Equally concerning is the fact that half of professionals indicated that no conversations with clients about AI tool usage have taken place yet. And when discussions do occur, concerns about data protection and accuracy are the main topics.

This confusion extends to external relationships as well. More than two-thirds of corporate and government clients remain unaware of whether their outside professional service providers are even utilizing GenAI. And the majority of clients have provided no direction whatsoever to their outside law firms concerning AI use, respondents said.

Organizations often ignore what employees need to know

Perhaps most revealing is how organizations are measuring 鈥� or failing to measure 鈥� whether their AI investments are paying off. Almost half of respondents said their organizations are not measuring return on investment (ROI) at all. Among the minority (18%) of respondents that said their organizations do track ROI, the metrics they use tell a story about organizational priorities. That fact that internal cost savings and employee usage rates lead the list suggests a focus on efficiency over innovation or quality improvements.

This measurement vacuum has consequences for employee experience. Without clear success metrics, employees lack feedback on whether their AI experimentation is valued, discouraged, or even noticed. The absence of ROI frameworks also makes it hard to justify training investments or dedicated time that allows employees to develop AI fluency.

AI usage doubles while support systems fall behind

AI usage among professional service organizations has nearly doubled over the past year, and professionals are increasingly integrating these tools into their workflows, the report shows. Yet organizational infrastructure that could support this adoption surge lags badly. Most professionals said they expect GenAI to become central to their work within the next two years 鈥� but that may be happening without roadmaps from their employers.

In addition, notable barriers in employees鈥� usage of AI remain. When asked what barriers could prevent their organization from more widely adopting GenAI and agentic AI, almost 80% of professionals cited concerns over inaccurate responses. Other concerns included worries over data security, privacy, and ethical use. Most of these suggest an ongoing lack of trust in GenAI.

The tool landscape adds another layer of complexity. Publicly available tools dominate current usage, with more than half of respondents (57%) citing their use, while proprietary or industry-specific solutions remain largely in the consideration phase. This suggests employees are often self-provisioning AI tools rather than working within enterprise-supported ecosystems. This potentially opens organizations to increased risk exposure because of security gaps, compliance risks, and inconsistent quality.

Employees鈥� job displacement fears increasing

Despite these challenges, employee sentiment toward AI remains cautiously optimistic. More than half (57%) of respondents said they are either hopeful or excited about the future of GenAI in their industry. Clearly, employees see AI’s potential to enhance their efficiency, automate routine tasks, and free up their time for higher-value work.

At the same time, hesitation and concern among employees are rising, particularly around accuracy, job displacement fears, and the unknown implications of autonomous AI systems. Notably, concerns about job displacement have doubled over the past year, and this trend demands organizational attention and transparent communication about a workforce strategy to combat this concern.

What organizations need to do now

Organizational leaders who are serious about positive employee AI experiences need to step up their efforts to provide guidance to employees and gain the ROI that AI promises. Specific steps they can take include:

• • • Draft clear and consistent guidance 鈥� Create explicit policies for employees about in which instances AI use is encouraged, required, or prohibited. This includes client communication protocols, data-handling requirements, and escalation procedures in those situations in which AI outputs seem questionable.
    • Develop and implement meaningful ROI metrics 鈥� Organizations must move beyond usage rates and cost savings as key success measurements. Tracking data points that capture quality improvements, time redeployed to strategic work, and client feedback on AI-enhanced deliverables present a more comprehensive picture. Also, leaders need to share these metrics transparently in order to give employees an understanding about organizational priorities.
    • Invest in structured learning 鈥� The survey shows professionals are experimenting with dozens of different tools from ChatGPT to specialized legal tech platforms. Organizations should curate recommended toolsets, provide hands-on training, and create communities of practice in which employees can share effective prompts and use cases with other users.

Our data shows that the employee experience around AI adoption reveals a workforce that is hopeful but hungry for direction and concerned about job impacts. Leaders who implement these actions effectively are more likely to unlock the strategic value that AI promises while building the trust and competence needed for their organizations and its employees to thrive in an automated future.

You can download a full copy of the 成人VR视频 Institute鈥檚听2026 AI in Professional Services Report听here

Key highlights:

• • • Universities face pressure over pedagogy鈥� Academic institutions are adopting AI as a reputational marker that鈥檚 driven by market pressure rather than educational need, creating a risk for students who can work with AI but not independently of it.

    • Entry-level roles under threat鈥� AI is being deployed most heavily to automate the grunt work of entry-level positions in which foundational professional skills are traditionally built through struggle and feedback.

    • K-shaped cognitive economy emerging鈥� Experienced professionals with existing expertise are gaining efficiency from AI, while entry-level workers are losing access to skill-building experiences.

According to Harvard University’s Professional & Executive Development division, innovation is defined as a 鈥減rocess that guides businesses through developing products or services that deliver value to customers in new and novel ways.鈥� Along this journey, professional judgement in decision-making is used numerous times to determine next steps at key stages.

Notably, the word technology is nowhere to be found in this definition 鈥� an absence , Assistant Professor of Learning Technologies at the University of Minnesota, has long found revealing. Instead, innovation is framed as creative problem-solving, contextual intelligence, and the ability to work across perspectives. Interestingly, Dr. Heinsfeld adds, none of these require constant automation. In fact, many of them are undermined by it.

However, AI adoption has the real potential to automate away the very experiences that build these capabilities from university lecture halls to corporate offices. With notable data already suggesting that , the risk that the current approaches to AI use in universities and companies are engineering away innovation and professional judgement skills is real, notes , Group Leader in AI Research at Harvard and NTT Research.

Indeed, some observers view AI as the largest unregulated cognitive engineering experiment in human history. Yet, unlike medical drugs that require years of approval and testing, AI systems are reshaping how millions of students think, learn, and make decisions without a comparable approval process or a shared framework for discussing any potential 鈥渟ide effects,鈥� as Dr. Heinsfeld pointed out.

Most worrisome is that AI is being deployed most heavily to automate precisely the entry-level roles where foundational professional skills are built.

So, what happens when an entire generation of future employees learn to delegate judgment before they develop it? And what actions do universities and companies need to take now to avoid this reality?

Risks of universities adopting AI under pressure

For universities, AI 鈥渉as become a reputational marker, and not adopting AI is framed as institutional risk, regardless of whether an educational case has been made or not,鈥� says Dr. Heinsfeld, adding that this is being driven, in part, by market pressure rather than pedagogical need.

Already, companies can greatly influence universities as employers of new graduates; and as such, AI systems are currently being optimized for speed, agreeability, and accessibility to stimulate ongoing use. However, as Dr. Heinsfeld contends, as universities race to earn the label AI ready without a careful, cautious and detailed understanding of how it may impact students鈥� cognitive processes, they run the risk of damage to their reputations of pedagogical integrity.

In addition, the “data as truth” paradigm is a complicating factor, she says. Drawing on her research, Dr. Heinsfeld explains how data 鈥渋s often framed as the idea of being a single source of truth based on the assumption that when collected and analyzed, it can reveal objective, indisputable facts about the world.鈥� Indeed, this ubiquitous mindset across universities and corporations treats data 鈥� such as that used to train large and small language models 鈥� as objective and indisputable.

Yet this obscures critical decisions about what gets measured, whose perspectives are included, and what forms of knowledge are systematically excluded from AI systems. As Dr. Heinsfeld warns, when data becomes synonymous with truth, “knowledge is what is measurable and optimizable.鈥� This narrows professional judgment to efficiency metrics rather than the interpretive depth, ethical reasoning, and cultural context that are essential for sound decision-making.

Judgment gap widens in workforce downstream

Under the current AI adoption approach, students could leave universities able to work听with听AI but not independently听of听it, a distinction emphasized by Dr. Heinsfeld. Like calculators, AI works as a tool only when foundational skills for its use exist first. Without this, graduates enter the workforce with a critical judgment gap that compounds from their lives as students at college campuses to becoming employees working in corporations.

AI adoption has the real potential to automate away the very experiences that build these capabilities from university lecture halls to corporate offices.

Most worrisome is that AI is being deployed most heavily to automate precisely the entry-level roles where foundational professional skills are built, warns Dr. Tanaka. Indeed, this is exactly the type of grunt work that teaches judgment through struggle and feedback. Over time, overuse of AI will result in quality being sacrificed because critical evaluation skills have atrophied.

Looking into the future, Dr. Tanaka foresees a K-shaped economy of cognitive capacity. Experienced professionals with existing expertise and contextual judgment built through years of experience will gain increasing efficiency from AI. Entry-level workers, however, will lose access to the valuable experiences that build professional judgement. This gap widens between professionals who can independently accelerate their workflows using AI and those whose traditional tasks are merely displaced by it.

Intervention may be able to break the cycle

The pattern is not inevitable, as both Dr. Tanaka and Dr. Heinsfeld explain. Drawing on Dr. Heinsfeld鈥檚 emphasis on institutional agency, meaningful intervention will depend on conscious, intentional choices made at every level. Both experts share their guidance for how different organizations can manage this:

Academic institutions 鈥� Universities must first recognize that AI adoption is a decision rather than an inevitability and make educational need the North Star for decision-making around AI. In her analysis, Dr. Heinsfeld emphasizes that when vendors set defaults, they quietly redefine academic practice. Defaults shape what is made visible or invisible and what becomes normalized. In AI-driven environments, universities often lose control over how models are trained and updated, what data shapes outputs, how knowledge is filtered and ranked, and how student and faculty data circulate beyond institutional boundaries 鈥� especially if decision-making is left to vendors. As a result, the intellectual byproducts of teaching and learning increasingly become inputs into external systems that universities do not govern.

Private entities 鈥� For organizations, Dr. Tanaka calls for feedback loops and other mechanisms that will promote more open discussion about AI use without stigma. In addition, companies need to proactively redesign entry-level roles听to ensure these positions continue to cultivate judgment and foundational skills in an AI-driven environment. Likewise, Dr. Tanaka suggests that companies explicitly provide feedback about cognitive trade-offs to employees, fostering an understanding of possible skill entrophy.

Employees 鈥� Similarly, individuals working for organizations bear much of the responsibility for making sure critical thinking is enhanced by AI. Indeed, strategic decisions about when to use AI while seeking to preserve cognitive capacity and professional judgement are key.

Looking ahead

In today鈥檚 increasingly AI-driven environment, a new paradigm is needed to combat the current operating assumption that optimization from AI is the sole path to progress. And because the current trajectory sacrifices human development for efficiency, the need for universities and companies to choose a different path is urgent 鈥� while they still have the judgment capacity to do so.

You can find out more about how organizations are managing their talent and training issues here

Key takeaways:

• • • Tax departments lack resources and confidence 鈥� More than half (58%) of tax departments are under-resourced, and 59% are not confident that they can upgrade their tax technology over the next two years.

    • Under-resourced departments incur more penalties 鈥� At least half of respondents from under-resourced tax departments say their departments incurred penalties over the past year, compared to only about one-third of those from properly resourced departments.

    • Making the shift to proactive planning and value creation 鈥� For many tax departments, the winning model blends in-house expertise, targeted external support, and a coherent tech/AI stack that allows teams to shift from tactical compliance to proactive planning and strategic value creation.

Under-resourced corporate tax departments spend more of their budget on external support compared to well-resourced teams 鈥� yet they’re more likely to incur penalties and less confident in forecasting, according to the 成人VR视频 Institute鈥檚 .

Given this, the problem isn’t a lack of spending 鈥� it’s the operating model. With respondents from 58% of tax departments saying they are under-resourced, 59% saying they lack the confidence needed to upgrade their existing tax technology over the next two years, and most spending more than half their time on reactive compliance work when they’d prefer to focus on strategic planning, clearly the gap between ambition and reality has never been wider.

The answer isn’t working harder or throwing more money at consultants, however. It’s building a hybrid ecosystem of people, platforms, and partners designed to shift capacity from firefighting to foresight.

The Groundhog Day problem

Every year feels the same: New tax legislation (such as the One Big Beautiful Bill Act or Pillar 2), new compliance burdens, new geopolitical uncertainty 鈥� coupled with the same old constraints. Too much work, not enough time, and technology that lags.

When deadlines hit, under-resourced teams rely on two blunt levers: overtime and reactive outsourcing. Internal staff end up working longer hours, and external providers plug the gaps at short notice. This model is breaking departments and it鈥檚 breaking down itself.

Under-resourced departments are significantly more likely to incur penalties, with 50% of respondents saying their under-resourced department had been penalized in the past year, compared to just 34% of respondents from well-resourced departments that say that, according to the report.

Further, under-resourced department respondents said they were less confident in their ability to forecast accurately, with just 26% saying their ability to forecast accurately was “very likely” compared to 43% of well-resourced department respondents. Ironically, under-resourced departments also spend more on external support as a percentage of budget (44%) compared to 37% for well-resourced departments. Clearly, spending more doesn’t solve structural problems 鈥� it often masks them.

Meanwhile, tax professionals report spending more than half their time on tactical or reactive work, even though they would prefer to spend up to two-thirds of their time on strategic analysis. Not surprisingly, when the team is locked into manual reconciliations and last-minute fixes, it’s nearly impossible to influence business decisions or shape strategy.

Why 鈥渁ll in-house鈥� or “all outsourced” no longer works

When more work is moved onto the plates of the internal tax team, all in-house can often come to mean all heroics 鈥� talented people drowning in compliance volume with no time to use the analytical tools already on their desks. Conversely, all outsourced risks hollowing out the department鈥檚 institutional knowledge and weakening its seat at the table.

A hybrid model asks better questions: What kind of work is this, and where does it create the most leverage? These questions can be used to determine where and to whom work should go. For example, high-volume, rule-based, recurring tasks are prime candidates for automation, shared services, or managed services under strong tax oversight; while complex, judgment-heavy, strategically sensitive work should remain anchored in-house, with external advisors extending capacity and offering specialized insight.

Thus, the best model for a modern corporate tax department is a hybrid ecosystem 鈥� not a fixed organizations chart, but a deliberate blend of internal expertise, enabling technology, and external capability partners.

Four layers of the hybrid ecosystem

This hybrid ecosystem can be delineated into four layers, each bringing their own insight and value:

1. 1. 1. People and roles redesigned 鈥� High-performing tax functions invest in analyst and tax-tech roles that connect tax to enterprise resource planning (ERP) systems, data hubs, and analytics, thus freeing technical experts from manual data work. Senior professionals then become embedded advisors to finance, treasury, and the business, not just compliance reviewers.
      2. Processes segmented into “run” and “change” 鈥� The biggest barriers to strategic work are excessive volume, heavy compliance burdens, limited resources, and time pressure. Modern tax departments respond by explicitly segmenting work in which run the business processes are documented, standardized, and increasingly automated or pushed into shared or managed service models. Change the business work remains tightly linked to senior tax staff.
      3. Technology becomes the data spine 鈥� More than half of respondents say they expect above-normal increases in their tax technology budgets, and more than half say their main resourcing strategy is introducing more automation. The goal isn’t collecting point solutions; rather, it’s building a coherent data spine that includes ERP integration, tax-specific data models, consistent workflow tooling, and strategic platforms that flex as regulations shift.
      4. AI act as an accelerator 鈥� Two-thirds of tax departments aren’t yet using generative AI (GenAI), according to the report. And among the one-third that are, usage clusters around research, document summarization, drafting, and some analytical support. The next step up the AI chain is for departments to move from individual experiments to standardized, governed workflows that scan legislation, prepare first drafts of memos, or interrogate large data sets for anomalies.

What high-performing hybrid tax departments do next

Departments that feel well-resourced, allocate more time for their professionals to conduct proactive work, and invest deliberately in technology and skills are significantly more confident in their ability to forecast accurately, avoid penalties, and minimize tax liabilities, the report shows.

Indeed, these high-performing hybrid tax departments:

• • • invest ahead of crises in people, tech, and processes
    • treat external providers as capability partners, not emergency relief
    • actively protect time for strategic work by automating or outsourcing routine tasks
    • insist on a durable seat at the strategy table, not just one for compliance reporting
    • experiment with automation and AI in focused, repeatable use cases

It is worth noting that smaller companies (those under $50 million in annual revenue) and the largest one (those with more than $5 billion in revenue) are leading the way by securing leadership buy-in early and leveraging specialized external expertise rather than trying to build everything in-house. Midsize companies, by contrast, are more likely to rely on in-house teams to lead automation efforts and less likely to use third-party vendors 鈥� a cautious approach that risks having them fall too far behind to catch up.

The message: Design the ecosystem, don’t just work harder

For corporate tax professionals, the message may be harsh but hopeful: You cannot work your way out of structural constraints by effort alone. Rather, a well-designed hybrid ecosystem can turn those constraints into a catalyst that will allow the department to deliver more value to the business. In fact, the modern corporate tax department is hybrid by necessity; but the question is whether it’s hybrid by design 鈥� or just by accident.

You can learn more about the challenges facing modern corporate tax departments here

You can read TRI鈥檚 latest 鈥淚nside the Shift鈥� feature,听The human side of AI: The growing risks of ubiquitous use of AI on talent here

It鈥檚 no exaggeration to say that AI is everywhere in our workplaces right now. It writes our emails, summarizes our meetings, generates slides, and even helps us think through problems. On the surface, this may sound like progress 鈥� and in many ways, it is.

However, our latest听Inside the Shift听feature, The human side of AI: The growing risks of ubiquitous use of AI on talent by Natalie Runyon, Content Strategist for Sustainability and Human Rights Crimes for the 成人VR视频 Institute, makes a clear and timely point: When AI use becomes excessive and unchecked, it can quietly undermine the very people it鈥檚 meant to help.

One major consequence of cognitive decay is the weakening of the brain鈥檚 capacity to engage deeply, question systematically, and 鈥� somewhat ironically 鈥� resist the potential manipulation of AI.

As the article goes into in much greater detail, these harms caused by AI overuse can include a slow erosion of human connections, a loss of a professional鈥檚 sense of purpose, and a general sense of feeling overwhelmed in the workplace.

Of course, the solution isn鈥檛 to reject AI, it鈥檚 to use it better. To this end, the article makes a strong case for organizations to foster hybrid intelligence, a process by which human judgment and creativity work alongside AI capabilities.

In today鈥檚 workplace, AI can be a powerful advantage; however, that is only if organizational leaders can remember that technology should enhance the human experience, not replaces the parts of professional life that workers value.

To examine this and many more situations, the 成人VR视频 Institute (TRI) has launched a new feature segment,听Inside the Shift, that leverages our expert analysis and supporting data to tell some of the most compelling stories professional services today

Key highlights:

• • • Human connection is now a competitive capability 鈥� Treat relationships as core infrastructure instead of cultural fluff by designing work to keep real collaboration, accountability, and regular face-to-face interaction at the center with AI in a supporting role.

    • Protect your judgment and meaning as “human-owned鈥� 鈥� Start with independent frameworks and reasoning, then use AI to refine and stress-test; and schedule recurring “no-AI” blocks to keep analytical muscle and professional agency strong.

    • The winning model is hybrid intelligence 鈥� The standout professionals in 2026 will be those who are fluent in both human dynamics and AI assisted workflow.

Professional services work fundamentally relies on judgment, trust, and relationships. Clients engage firms for confidence and strategic guidance, while a good reputation in this sector develops through the consistent delivery of high-quality counsel. While AI can enhance these capabilities, these technologies may also erode professional value if permitted to displace the distinctly human elements that differentiate exceptional service.

The imperative for 2026 is to maintain full professional capability by embracing human strengths while leveraging technological tools. Consistent application of the following practices will protect and develop the competencies that AI cannot replicate.

Build your human connections muscle

In the near future, professionals may spend more time interacting with AI systems than they do with colleagues. Over time, AI creates opportunities to disengage from human interaction; and AI systems remain consistently agreeable, perpetually available, and never introduce tension into professional discourse.

For time-constrained professionals, this predictability may appear advantageous; however, this convenience carries a substantial cost. In professional services, relationships constitute essential infrastructure rather than supplementary benefits. When professional interaction shifts from human to machine interface, social acuity diminishes as professionals lose exposure to subtle human dynamics. Critical developmental experiences 鈥� including the ability to manage discomfort, resolve misunderstandings, and navigate the productive friction that builds capacity for maintaining and repairing strained relationships 鈥� become scarcer.

To preserve human connection capacity with intention, implement these measures:

• • • Prioritize work that requires genuine collaboration and shared accountability and keep AI as a supporting resource.
    • Establish regular face-to-face interaction, both virtual and in-person, with colleagues to invest in relationship-building conversations that extend beyond project deliverables and timeline discussions.
    • Actively engage in professionally challenging interactions, including those involving constructive feedback delivery and negotiation. These experiences maintain trust and prevent the gradual atrophy of human collaboration skills.

Protect your brain and your meaning at work

AI technologies offer substantial efficiency gains through automated drafting, summarization, and information analysis. However, excessive reliance on these capabilities may diminish the cognitive repetitions that maintain professional acuity. In professional services, intellectual capacity, which includes attention to detail and analytical reasoning, constitutes the primary asset. This capacity requires the ability to discern significance, interrogate underlying assumptions, and articulate complex tradeoffs with precision.

Delegating these cognitive tasks to AI systems daily may yield short-term efficiency while lowering costs, but this may lead to work becoming ambiguous and require less nuanced judgment. As a result, professional instincts may atrophy.

An additional consequence of AI overreliance involves the erosion of professional meaning and engagement. When AI systems generate the majority of intellectual output, professionals may risk becoming approvers rather than creators. Work devolves into review and authorization 鈥� a repetitive pattern that can lessen one’s connection to making a substantive professional contribution. Indeed, the role begins to resemble a production line of incremental validations rather than meaningful professional practice.

To avoid this, you should implement the following practices to preserve both intellectual rigor and a meaningful sense of agency over critical professional activities:

• • • Integrate deliberate cognitive exercises into weekly routines 鈥� Initiate substantive work with independent analysis 鈥� by establishing frameworks, identifying priorities, and constructing logic 鈥� before employing AI to refine structure, enhance clarity, and stress-test reasoning. Subsequently, critically evaluate AI-generated output by identifying omissions, examining underlying assumptions, and assessing potential errors.
    • Establish dedicated periods for unassisted professional work 鈥� Schedule regular intervals for research, conceptual development, and drafting without AI support to ensure sustained development of analytical capacity and professional judgment.
    • Anchor work to meaning and outcomes 鈥� Identify work of particular professional significance and maintain direct engagement with these tasks, again without AI assistance. Regularly reflect on the tangible impact of contributions, including the delivery of client value and the support of colleagues, in order to better sustain meaningful connection to professional purpose.

Hybrid intelligence is the future

The most effective professionals in 2026 will be those that are focused on their capacity to integrate human literacy with algorithmic literacy, which is a competency framework known as hybrid intelligence.

Human literacy remains the fundamental differentiator in professional services, encompassing the ability to interpret interpersonal dynamics, establish trust amid complexity, deliver constructive feedback with appropriate sensitivity, and maintain both self-awareness and relational intelligence.

Algorithmic literacy involves understanding the specific capabilities and limitations of AI tools, including honing a proficiency for output verification, tool evaluation, and sustained awareness of bias and risk considerations.

The combination of these two factors within hybrid intelligence can give professionals a potent way of fighting the accelerating cognitive deterioration and听agency decay听that some may experience with AI overuse.

Today, organizational mandates for AI adoption are becoming increasingly prevalent and will approach universality over the next few years. While firms compete through technological capability, competitive differentiation will ultimately derive from the human excellence of their professionals 鈥� a dynamic that will similarly shape individual career trajectories.

You can find out more about how a focus on power skills can help professionals in the workplace here

Key takeaways:

• • • Immediate R&D deductions 鈥� The One Big Beautiful Bill Act introduces Section 174A, which restores immediate deduction of domestic research and experimental expenditures starting in tax years beginning after December 31, 2024, reversing the controversial five-year amortization requirement that took effect in 2022.

    • Retroactive tax changes 鈥� Small business taxpayers with average annual gross receipts of $31 million or less (for tax years beginning in 2025) will generally be permitted to apply this change retroactively to taxable years beginning after December 31, 2021, offering significant opportunities for amended returns and potential refunds.

    • Planning considerations needed 鈥� The legislation modified Section 280C, which now requires that domestic R&E expenditures be reduced by the amount of research credit, creating new planning considerations for businesses claiming R&D tax credits alongside Section 174 deductions.

The Tax Cut and Jobs Act (TCJA), enacted in December 2017, brought significant changes to Section 174, impacting how businesses account for research and development (R&D) expenditures. With the passage of the One Big Beautiful Bill Act earlier this year, the landscape has shifted dramatically once again, requiring tax departments to engage in strategic planning and proactive tax management.

Section 174: From immediate expense to amortization

First enacted in 1954, Section 174 allowed for the deduction of expenditures related to R&D in the year the expense occurred. The TCJA eliminated the ability to deduct R&D costs as an expense in the year incurred, requiring costs to be amortized over five years for domestic research and 15 years for research outside of the United States.

Over the years, the IRS released guidance several times on how best to approach Section 174鈥檚 R&D capitalization. The most recent substantive guidance came in Notice 2023-63 (in September 2023), which provided interim guidance on the capitalization and amortization of specified research or experimental expenditures; and Notice 2024-12 (December 2023), which clarified the earlier guidance. Additionally, Revenue Procedure 2025-8 (December 17, 2024) provided updated procedural guidance for taxpayers filing automatic accounting method changes related to Section 174 expenditures.

Since the changes to Section 174 took effect in 2022, businesses have struggled to track R&D costs, including what should be excluded or included. This shift created cash flow challenges for innovation-driven industries, leading to widespread calls for reform.

The One Big Beautiful Bill Act: A game-changer for R&D expensing

The One Big Beautiful Bill Act (OB3) that was signed into law by President Trump on July 4th, brought sweeping changes to the tax treatment of domestic R&D expenditures. Under a new addendum, Section 174A, capitalization is no longer required for qualified domestic research activity for tax years beginning after December 31, 2024.

This represents a major victory for businesses that have been lobbying for relief from burdensome amortization requirements. For many businesses, this change will simplify tax compliance, improve cash flow, and reduce overall tax liability.

Importantly, amounts paid or incurred in connection with software development are treated as R&E expenditures eligible for immediate expensing, which can provide particular relief to technology companies and startups. However, research or experimental expenditures attributable to research conducted outside the United States must continue to be capitalized and amortized over 15 years, creating a bifurcated system that requires careful tracking of domestic R&D activities, compared to foreign activities.

The OB3 legislation also includes particularly generous provisions for small businesses. Small taxpayers 鈥� those defined by a gross receipts threshold established in Section 448(c) 鈥� can amend tax returns as far back as 2022 to reverse the capitalization of R&E expenses. The Section 448(c) threshold is adjusted annually for inflation; and currently, for tax years beginning in 2025, the threshold is $31 million in average annual gross receipts over the prior three tax years.

For all taxpayers that made domestic research or experimental expenditures after December 31, 2021, and before January 1, 2025, will be permitted to elect to accelerate the remaining deductions for such expenditures over a one-year or two-year period, providing flexibility in managing taxable income.

Planning for the new landscape

While the OB3 provides welcome relief, corporate tax professionals must remain vigilant and proactive. The legislation introduces new complexities, particularly around . The change mirrors the Section 280C rules that were in place prior to the enactment of TCJA in 2017, although taxpayers still have the option to make an election under Section 280C that would reduce their research credit by the maximum corporate tax rate (21%) in lieu of reducing their domestic R&E expenditures.

Here are other key considerations for corporate tax department leaders navigating the new Section 174A landscape:

Understanding qualified research 鈥� Tax departments must understand what is considered qualified research and development under the new rules. This involves staying current on all guidelines issued by tax authorities and working closely with the company’s R&D team. Critically, teams must now distinguish between domestic and foreign R&D activities, as the tax treatment differs significantly. This information should be communicated to upper management when considering product expansion or enhancements.

Documentation & recordkeeping 鈥� Concise documentation of any expense activity remains essential. Tax departments should capture now and decide later 鈥� because it’s better to have the data than not. For any R&D activity that takes place outside of the US, all data should be captured separately from domestic activities. Corporate tax departments should systemize documentation, collection, and storage of R&D expense-related information.

Amended return opportunities 鈥� Small businesses should immediately evaluate whether they qualify for retroactive relief and assess the potential benefits of amending their returns for the years 2022 through 2024. Even larger taxpayers should analyze whether electing to accelerate remaining unamortized amounts into 2025 or splitting them between 2025 and 2026 provides optimal tax outcomes.

Section 280C planning 鈥� Departments must carefully model the interaction between R&D tax credits and Section 174A deductions. The restored reduction requirement means businesses must evaluate whether making the Section 280C election to reduce the credit rather than taking the deduction would provide better overall tax results.

Scenario planning 鈥� Departments should develop multiple financial models based on different elections and timing strategies. This will help the company understand the range of impacts these changes will have on cash flow, net operating losses, and overall tax liability.

The OB3 represents a major course correction for R&D tax policy, but it requires tax professionals to adopt a proactive approach to maximize benefits. Corporate tax departments can navigate these changes effectively by staying informed about legislative developments, engaging in continuous learning, and leveraging advanced tax planning strategies. Also, collaboration with internal teams and external advisors will be crucial in identifying opportunities and mitigating risks.

Ultimately, establishing a proactive and nimble mindset will enable corporate tax professionals to optimize their positions and drive business success in this evolving regulatory landscape.

You can find more about how the One Big Beautiful Bill Act has impacted tax issues here

Key takeaways:

• • • Advocate for investment in technology and talent 鈥� As compliance and strategic demands grow, tax departments should use benchmark data from industry reports to build compelling business cases for automation, generative AI, and additional headcount.

    • Explore transferable tax credit opportunities 鈥� The transferable tax credit market has matured significantly, more departments should pursue these to offset tax liability, reduce estimated quarterly payments, and free up cash flow.

    • Proactively manage the OB3 transition 鈥� The One Big Beautiful Bill Act introduces substantial federal tax changes requiring strategic planning for 2026. Document analysis carefully as state conformity issues create future audit exposure.

The corporate tax landscape in 2025 is defined by resource constraints, regulatory complexity, and rapid technological change. And many corporate tax department leaders face mounting pressures from compliance demands, talent shortages, and evolving legislation 鈥� all while being asked to deliver more strategic value to their organizations, according to the , published by the 成人VR视频 Institute and Tax Executives Institute.

Under-resourcing and strategic gaps persist

Perhaps the most striking finding from the 2025 report is that 58% of corporate tax department professionals said their departments are under-resourced 鈥� an increase from 51% who said that the previous year. This apparent deterioration in resourcing creates cascading risks for businesses. Departments facing resource constraints report higher rates of penalties and audits, with 44% of survey respondents saying their under-resourced department experiencing penalties in the past year and 12% saying it had faced penalties exceeding $1 million.

The good news is that more departments are planning to hire rather than rely on overtime from existing staff, the report shows. However, the talent pool remains tight, making recruitment challenging. For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.

For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.

The report also showed that corporate tax departments continue to struggle with an imbalance between strategic and tactical work, with in-house tax professionals noting that they spend the majority of their time on reactive, tactical tasks while ideally wanting to reduce this to approximately 30% to 38% of their time.

What’s holding teams back? Excessive workload volume tops the list, they said, followed by complex compliance requirements, limited resources, and outdated technology. While two-thirds of respondents said their departments are still in the chaotic reactive stage of technology maturity, more than half said they expect higher-than-normal budget increases for investment in tax technology in the coming year, with many beginning to incorporate generative AI (GenAI) into their workflows.

Opportunities to create value exist

While these challenges exist, there are ways that corporate tax departments can identify and pursue value in the coming year. For example, the passage of the One Big Beautiful Bill Act (OB3) in mid-2025 introduced substantial changes to federal tax provisions including the ability to immediately expense research and experimentation costs under Section 174, reintroduction of full bonus depreciation, and liberalized interest deduction limitations.

The new Section 904(b) rules significantly improve the foreign tax credit mechanism by eliminating the allocation of interest expense and research and experimental (R&E) expenses to foreign source income, potentially lowering effective tax rates from 18.9% to approximately 14% at the aggregate level.

Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments.

However, OB3’s retroactive application to tax year 2025 creates immediate compliance complexity. State conformity issues compound the challenge, as many states have not yet updated their codes, creating potential mismatches between federal and state taxable income calculations.

Further, the transferable tax credit market has matured significantly, with nearly 25% of Fortune 1000 companies now participating, which is a 60% increase over 2024. Current market conditions favor buyers, with investment tax credits and production tax credits trading at discounts of 89-cent to 91-cents on the dollar.

These credits can offset tax liability, reduce estimated quarterly payments, and free up corporate cash flow. Tax departments should explore this opportunity as another tool for creating measurable value for the business.

Planning for 2026 and beyond

Despite the challenges facing corporate tax departments in 2025, success stories abound. Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments. The key is making the case for investment, staying ahead of regulatory changes, and continuously communicating your added value back to the business.

You can download听a full copy of the听, from the 成人VR视频 Institute and Tax Executives Institute, here

Key takeaways:

• • • Reframe your value proposition 鈥� Translate tax achievements into business language the C-suite understands, such as protecting shareholder value, enabling growth, and mitigating risk rather than simply reporting compliance metrics.

    • Invest strategically in technology and talent 鈥� Prioritize automation and AI tools while outsourcing strategically to free internal resources for high-value strategic work that demonstrates the department’s business impact.

    • Build cross-functional partnerships 鈥� Proactively collaborate with IT, legal, operations, and HR on enterprise-wide initiatives that will position the tax function as an essential strategic partner rather than an isolated compliance department.

SAN FRANCISCO 鈥� In recently released , published by the 成人VR视频 Institute and Tax Executives Institute,听a large portion of the tax department professionals surveyed expressed their desired to do more strategic work compared to simple tactical work. This was a theme we鈥檝e seen repeatedly across our research: Tax professionals are shedding their traditional compliance-focused image and moving toward becoming strategic business partners to their organizations.

By articulating their value proposition, investing strategically in technology and talent, and aligning with broader business objectives, tax department leaders can secure the resources and influence needed to drive meaningful organizational impact.

Yet, the tax function has long been viewed as a necessary cost center 鈥� a department that ensures compliance, files returns, and manages audits 鈥� despite the essential work that in-house tax professionals do. Rarely did these professionals feel they are treated as strategic business partners. However, perception is rapidly changing, according to the insights shared at the recent听.

Today’s tax leaders are positioning their teams as strategic partners who provide critical insights that influence business resilience, growth strategies, and organizational risk management, conference panelists explained.

The evolving role of the tax function

Amid ongoing tax and trade policy shifts and increased business uncertainty, opportunities abound for tax professionals in corporate tax departments. Indeed, several panelists noted that the State of the Corporate Tax Department report showed that tax leaders are increasingly becoming deeply involved in strategic decisions ranging from business resilience strategy (with 63% of survey respondents saying their tax department is involved in this area) to M&A transactions (60%), organizational risk management (58%), and supply chain management (55%).

Further, CFOs are increasingly looking to their in-house tax leaders for support across multiple strategic areas, including digital transformation and AI, ESG strategy, workforce strategy, and economic resilience planning. This expanded role creates for the tax team creates both opportunities and challenges for those seeking to demonstrate their strategic value.

By articulating their value proposition, investing strategically in technology and talent, and aligning with broader business objectives, tax department leaders can secure the resources and influence needed to drive meaningful organizational impact.

In fact, one of the most pressing question tax leaders face is how to secure adequate budget funding in an environment of competing corporate priorities. The answer lies in strategic thinking about resource allocation and being intentional about having a seat at the table to better advocate for necessary investments. Tax department leaders must educate executive leadership on the risks that come with not having enough budget resources 鈥� from trying to do more with less to the potential for the company to face more exposure and risk that includes increased audits and fines.

As session panelists explained, the key is to frame discussions in terms that C-Suite leaders understand. Rather than simply requesting more resources, tax leaders should articulate how investments in the tax function can all it to better protect revenue, enable growth opportunities, and mitigate organizational risk.

Creating a value-focused identity

That articulation to management is a big step toward a tax function鈥檚 goal to move from feeling and acting like a cost center to being a strategic partner to the business. Indeed, corporate tax department leaders must change their own perceptions of how the department is perceived first 鈥� in essence, rebranding themselves and reimagining their identity. This starts with creating a compelling value story that resonates with the C-suite.

Start with creating (or recreating) a department mission statement that emphasizes value creation rather than mere compliance, aligning with broader priorities of the organization, such as business partnership and growth. Then, work to provide insights to drive decisions, and support regulatory demands while maintaining transparency.

Check out for more insight on how corporate tax professionals shift from compliance to strategic work

One practical approach is to speak the language of the C-suite by translating tax achievements into business metrics that executives care about, panelists added. For example, rather than reporting that the department completed the tax provision on time, frame it instead as the department protected $X million in shareholder value through accurate financial reporting or enabled the acquisition to close on schedule by providing timely tax due diligence.

It is also important for tax departments to track and communicate their wins consistently, panelists said, creating regular touchpoints with executive leadership to share accomplishments that position the tax function as a proactive business partner.

Navigating technology, talent, and collaboration

Technology investment represents both an opportunity and a challenge for tax departments, as the State of the Corporate Tax Department report makes clear. More than half of the respondents say they expected some increase in their budgets to invest in new tech tools over the next few years, and many indicate they plan to invest in tools and solutions to automate their workflow, especially those that support machine learning and generative AI (GenAI).

While it is great they are anticipating an increased budget, panelist explained that tax department leaders must educate management on the practical challenges of AI adoption, including the need for clean, well-structured data as a foundation.

It is also important for tax departments to track and communicate their wins consistently, creating regular touchpoints with executive leadership to share accomplishments that position the tax function as a proactive business partner.

On another point, staffing remains one of the most critical challenges facing tax departments, and many survey respondents cited hiring as key strategic priority, according to the report. Many departments will also look to technology to augment the missing talent and strategically use outsourcing and co-sourcing to alleviate talent pressure as well. And by partnering with external advisors for specialized compliance work or surge capacity during peak periods, tax departments can further free up internal resources to focus on higher-value strategic activities.

In fact, a central theme the session panelists leaned into was how the most effective tax departments build strong collaborative relationships across the organization. According to the report, 94% of CFOs and tax leaders report that the CFO helps facilitate cross-collaboration between tax and other functions such as legal, IT, operations, and finance.

Tax department leaders should proactively seek these opportunities to partner with other departments on strategic initiatives; for example, collaborating with IT on digital transformation, working with operations on supply chain optimization, partnering with legal on M&A transactions, and supporting HR on workforce strategy.

Today, the transformation of the corporate tax function from cost center to strategic partner is not merely aspirational 鈥� it is already underway in many forward-thinking organizations. As tax, audit, and trade policy become more complex and business uncertainty continues to mount, the opportunity for tax leaders to demonstrate their strategic value to the organization has never been greater.

You can download听a full copy of the听, from the 成人VR视频 Institute and Tax Executives Institute, here

Key highlights:

• • • AI strategy should drive individual accountability 鈥� Alignment between organizational AI strategy and individual accountability is essential. Most professionals lack clarity on their organization’s AI goals, which hinders meaningful progress and innovation.

    • Strategic AI plan also should drive business revenue growth 鈥� Organizations with well-communicated and strategic AI plans are significantly more likely to realize critical business benefits and revenue growth from their AI investments.

    • Personal AI goals boost usage and accountability 鈥� Setting and linking personal AI goals for all professionals drives regular use and accountability, which is crucial for turning technology investments into tangible organizational success.

Organizations are discovering that true AI transformation in this digital age extends beyond technology alone. The key to maximizing AI鈥檚 value lies in connecting organizational strategy with individual employee accountability and responsible use, according to the 成人VR视频 2025 Future of Professionals report. Indeed, the report reveals that without clear communication of AI strategy and the setting of personal AI goals, even the best technology investments can fall short. Only by focusing on their professionals can organizations find their way forward to maximizing the value of their AI investments.

Clearly communicate organization鈥檚 AI strategy and goals

A听critical yet often overlooked factor in successful AI adoption is the alignment between individual actions and the broader organizational AI strategy. In fact, almost two-thirds (65%) of professionals surveyed who said they have personal goals for AI adoption also said they are not aware of their organization鈥檚 overall AI strategy, according to the Future of Professionals report. Further, only 39% of all professionals say they have personal goals linked to AI adoption, which leaves a majority (61%) without clear direction or accountability in their own use of AI.

When professionals operate without clarity on the organization鈥檚 strategic direction, their efforts may not contribute meaningfully to broader business objectives. This leads to wasted investment, fragmented progress, and missed opportunities for cross-functional innovation.

The consequences of this misalignment are significant, especially as AI becomes increasingly central to operational efficiency and competitive advantage. The report cites that organizations that craft a strategic plan for their AI adoption and implementation are 3.5-times as likely to see critical AI benefits compared to those without any significant plans. Adding to this, those organizations with a strategic AI plan are almost twice (1.9-times) as likely to already be experiencing revenue growth as a result of their AI investment, compared to those organizations that are adopting AI informally.

These findings underscore that the mere presence of AI technology is not enough. Successful deployment depends on coordinated, intentional actions at every level. For organizations seeking to maximize the value of their AI investments, ensuring that every employee understands how their own learning, experimentation, and adoption of AI tools fits into that vision is just as important as articulating the organization鈥檚 overall vision.

Leverage professionals鈥� personal AI use to drive accountability

Unfortunately, there is a strong disconnect with professionals鈥� own AI use in the workplace, according to the Future of Professionals report, which reveals that 70% of professionals say they are not yet using AI tools on a regular basis. This gap between organizational ambition and day-to-day practice leads to a situation in which substantial investments in technology yield only limited returns.

Our research makes it clear that regular engagement with AI tools has a significant impact. Professionals who use AI routinely are 2.4-times as likely to report organizational benefits from AI adoption compared to those who use it sporadically or not at all. Yet, setting and linking personal AI goals for every professional remains a rare practice. Only 21% of professionals with AI adoption goals report using AI at least once a week, underscoring the importance of personal accountability in driving meaningful adoption. Additionally, professionals who say they have clearly defined AI goals are 1.8-times as likely to see tangible organizational benefits, highlighting the powerful link between individual commitment and collective success.

To bridge this gap, organizations must move beyond simply providing access to AI tools and instead require all professionals to set personal AI learning and usage goals that are explicitly tied to broader business objectives.

Mandate human oversight

As organizations accelerate their adoption of AI, they need to require human oversight and responsible use of these technologies. The report notes that concerns about accuracy, security, and the potential for overreliance on AI remain significant barriers to robust adoption. Notably, an overwhelming 91% of professionals say they believe that computers should be held to higher standards of accuracy than humans, with 41% insisting that AI outputs must be 100% accurate before they can be used without human review. This high threshold underscores the persistent trust gap and the need for rigorous validation processes.

Beyond accuracy, professionals are also wary of the impact that excessive reliance on technology could have on their own or their colleagues鈥� development. Nearly a quarter (24%) of respondents say they fear that overreliance on AI may stunt the growth of essential professional skills. Without ongoing human involvement, there is a real risk that core competencies could erode over time, potentially leaving professionals less capable and more dependent on technology.

The solution lies in fostering a culture of responsible AI use, one in which human expertise remains central. Organizations must therefore set clear standards for AI oversight, provide training on ethical and critical evaluation of AI outputs, and encourage continuous skill development alongside technological advancement.

As organizations chart their course through the rapidly evolving landscape of AI, the most successful will be those that put their people at the heart of their strategy. By acting intentionally and fostering a culture in which human insight and innovation drive the use of AI, both organizations and individuals can secure lasting success and lead the way into an AI-enabled future.

You can download a full copy of the 2025 Future of Professionals report here

Key takeaways:

• • • Penalties spike when resources and controls are stretched thin 鈥� Under-resourced tax departments face significantly higher penalty exposure, with nearly half reporting at least one penalty and one-in-eight experiencing fines exceeding $1 million.

    • Reactive workloads erode savings and accelerate burnout 鈥� Tax professionals spend most of their time on reactive or tactical work despite preferring a 70/30 strategic/tactical split, creating an environment in which reaction consumes planning capacity.

    • Incrementally targeted technology deliver faster returns than big-bang overhauls 鈥擭early 70% of tax departments remain in chaotic or reactive stages of digital maturity, with many tax professionals saying they lack confidence in their department鈥檚 ability to upgrade systems within two years.

The numbers are blunt. A large portion (44%) of respondents to the report, published by the 成人VR视频 Institute and Tax Executives Institute,听say their department had at least one penalty 鈥� and among under鈥憆esourced tax departments, it was nearly one鈥慼alf. And one-in-eight say these fines topped $1 million.

And when it comes to technology, large portions of tax department professionals say their departments鈥� approach to technology is either chaotic or reactive (69%), and two鈥憈hirds say their departments aren’t currently using generative AI (GenAI) to improve efficiency within the department.

This isn’t a skills problem 鈥� it’s a system problem.

Fortunately, as the Corporate Tax Department report showed, there are steps that corporate tax department leaders can take, including:

• • Treat penalty reduction as a board鈥憀evel KPI, tracking the number, value, and cause of penalties to better pinpoint control gaps
  • Direct a defined slice of the technology budget toward core preventives 鈥� such as data accuracy, filing automation, indirect鈥憈ax determination, and reconciliation tools 鈥� that can cut errors before they become fines
  • Frame resource requests around real avoided鈥憄enalty scenarios, because showing that incremental investment could have offset last year鈥檚 losses builds a more persuasive case for future funding

Ultimately, penalties and fines are data points that reflect a deeper through-put problem and solving that requires visibility at the corporate governance level, not reactive patchwork after the fact.

The reactive鈥憌ork trap that quietly kills savings

This year鈥檚 report found that tax professionals spend most of their time on reactive or tactical work, even though they say they鈥檇 prefer to see a 70/30 strategic/tactical mix. Also, nearly 60% describe their departments as under鈥憆esourced 鈥� up from 51% a year earlier.听 Having an under鈥憆esourced tax department, our research shows, can create an environment in which reaction consumes any planning and strategic work.

Indeed, the consequences of being under-resourced compound quickly. More than half of respondents from under-resourced departments say they face penalties, and many also report missing tax鈥慶redit opportunities, delaying cross鈥慺unctional projects, and operating with less confidence in their forecasts or liability management.

Not surprisingly, burnout is another hidden cost that under-resourced departments pay daily: Tax teams that are stretch through overtime to compensate for structural and personnel shortfalls often see reduced accuracy, just when judgment is most needed.

Again, there are steps that corporate tax department leaders can take, including:

• • Establish a proactive鈥憈ime floor and mandate that each week a fixed block of time is reserved for modeling, forecasting, or credit discovery 鈥� then, measure results in saved cash or lower effective鈥憈ax鈥憆ates
  • Create a rapid鈥憈riage lane for repetitive fire drills that would allow you to codify recurring crises 鈥� such as late adjustments, jurisdictional queries, or document chases 鈥� and then automate the intake so these tasks stop devouring cognitive bandwidth
  • Invest in targeted capacity, not generic headcount; adding a tax鈥憈ech analyst or process鈥慳utomation specialist yields more lasting leverage than simply dividing the same tasks among already overworked staff

In much of this, the bigger insight is cultural: Reclaimed time is reclaimed value. Every hour shifted from reactive compliance to predictive analysis strengthens your tax department鈥檚 compliance posture.

Tech hesitation is expensive, while smaller faster wins matter more

As the report shows, almost 70% of respondents say their tax departments are still in the chaotic or reactive stages of digital maturity, and barely 6% operate optimally. Further, nearly 60% of respondents say they lack confidence in their ability to upgrade systems within the next two years. This correlation between reactive approaches and technological stagnation can feed directly into a department seeing increased penalties and an overreliance on manual processes.

Interestingly, corporate tax departments in smaller organizations, those with less than $50鈥痬illion in annual revenue, and those from very large organizations, with more than $5鈥痓illion in annual revenue, are outpacing their midsize peers when it comes to technology purchases and integration. In fact, these two groups 鈥� at opposite ends of the market 鈥� are more likely to secure leadership buy鈥慽n, tap external vendors for automation, and climb faster toward proactive operations.

Of course, GenAI sits on the cusp of this changing that trajectory. More than half (57%) of respondents say their tax departments are implementing new technology this year, including GenAI-driven tools. And those departments that are, mainly are using it for research, summarization, and document drafting, rather than more complex integrated tax analytics. However, without a reliable tax data spine 鈥� clean, centralized, and accessible data 鈥� even the smartest model can鈥檛 deliver true automation or insight.

Still, as the report outlines, there are actions that tax department leaders can take now to boost their department鈥檚 tech prowess, including:

• • Prioritize 蹿补蝉迟鈥慠翱滨 automations, such as indirect鈥憈ax determination, e鈥慽nvoicing compliance, tax鈥憄rovision close tasks, and certificate management. These are proven areas in which automation immediately cuts cycle times and penalty exposure
  • Pair early GenAI pilots with structured data. For example, start with narrow copilots for research or variance explanation, but feed them curated internal data to evolve beyond guesswork and toward data-driven decisions
  • Borrow capacity intentionally and partner with third鈥憄arty automation specialists for discrete projects using a build鈥憃perate鈥憈ransfer model. This way, internal teams inherit sustainable, well鈥慸ocumented workflows rather than black鈥慴ox solutions.

Waiting for a full replacement of the organization鈥檚 enterprise resource planning system or a perfect end鈥憈o鈥慹nd tech stack actually can trap departments in perpetual backlog. Incremental wins, particularly those tied directly to penalty reduction or labor savings, can build the momentum and political capital needed to make the case for proper resourcing for larger transformations.

The recent 2025 State of the Corporate Tax Department report reveals a powerful connection between resource allocation and tax department performance: Under-resourcing perpetuates penalties and reactive workflows that can only be broken by shifting to proactive systems and automation.

For tax department leaders, the imperative is clear 鈥� invest in prevention, reclaim strategic time, and modernize incrementally, because true progress comes not from doing more, but from choosing fewer priorities and executing on those select ones with excellence.

You can download听a full copy of the , from the 成人VR视频 Institute and Tax Executives Institute, here