The future of the tax prep industry

There’s no sugarcoating it. The tax preparation industry is at a crossroads. On the latest episode of the Teaching Tax Flow: The Podcast, co-host John Tripolsky and I took a deep dive into where the tax world is headed, what’s changing for professionals and taxpayers, and why your next tax decision could make or break your long-term strategy.

Tax prep is evolving

Let’s call it like it is: The profession is shrinking. Between 2016 and 2023, there was a 37% drop in CPA exam candidates. At the same time, 75% of CPAs are expected to retire in the next 15 years. We’re not just experiencing a labor shortage; we’re watching an aging industry struggle to fill the pipeline. And while that’s concerning, it’s also an opportunity for the right people and the right firms.

Tax prep is evolving. Fast. We’ve moved from staplers and white-out to cloud portals and AI. Gone are the days of shoeboxes full of receipts and handwritten ledgers. But the workload hasn’t gotten easier, just different. Technology has streamlined some parts of the process, sure, but the complexity of returns has exploded. Digital assets, short-term rentals, RSUs, and new reporting requirements such as the 1099-DA, Digital Asset Proceeds From Broker Transactions, are reshaping the tax landscape at lightning speed.

And let’s not forget the IRS. They’ve started using AI for fraud detection and form scanning. This means more matching notices, faster enforcement, and an increasing burden on taxpayers to provide clean, accurate, and timely data. Expect more CP2000 notices, especially for missed crypto transactions and third-party payment platform income.

So where does that leave you?

If you’re a taxpayer, the game has changed. Your relationship with your tax professional matters more than ever. Tax prep isn’t just a once-a-year event; it’s a process that requires trust, transparency, and collaboration. You wouldn’t go to the dentist without brushing your teeth, and you shouldn’t show up to your CPA with incomplete documents in March and expect a flawless result. The best outcomes come from proactive planning, early preparation, and open communication.

If you’re a tax professional, here’s the hard truth: Compliance-only firms are becoming obsolete. Like a VCR repair shop, you might still exist, but your relevance is fading. The future belongs to firms that offer advisory, leverage technology (yes, including AI), and price based on value, not hours. Subscription models, proactive planning, and year-round engagement are the new standard. If you’re not evolving, you’re eroding.

At our firm, we’ve embraced this shift for more than a decade. We lean into tax planning, automate the routine, and build deep partnerships with our clients. We price transparently, because no one likes opening a menu with no prices. And yes, we even use overseas help when necessary, because talent gaps don’t wait for perfect local hires.

So what can you do right now?

Taxpayers: Take ownership. Vet your tax pro like you would a contractor. Look for educational content, social proof, and a willingness to engage beyond tax season. Be an active participant in your own tax journey.

Tax pros: Drop the badge of honor for working 100 hours a week. Stop hiding from AI. Embrace value-based pricing. Build processes that are scalable, sustainable, and centered around advisory. The profession isn’t dying; it’s transforming.

The tax prep industry isn’t doomed. It’s just entering its next era. Whether you’re a taxpayer or a tax pro, the question is the same: Are you ready to evolve?

I’d love to hear your thoughts. Are you seeing these changes in your own experience? What excites, or concerns, you about the future of tax prep? Comment below or join the discussion in our Facebook group, Defeating Taxes.

Until next time, keep learning, keep planning, and keep flowing forward.

Editor’s note: This article was originally published on Chris Picciurro’s LinkedIn page. Chris is a frequent contributor to the Intuit® Tax Pro Center, so check out his other articles for more content on tax law and news.