The Future of Tax and Accounting Automation: 7 Predictions for 2025

The tax and accounting profession is in the midst of one of its most significant periods of change in decades, driven by an increasingly complex regulatory environment and rapidly changing technology. And while the benefits of automation have already started to show, firms are facing a more immediate and dire challenge: the staffing crisis. Plagued by an aging workforce and declining interest in the profession, many firms are understaffed and struggling to recruit new talent.

But it doesn’t stop there. Clients are demanding faster and more accurate services, putting even more pressure on firms that are already stretched too thin.

Automation has become a critical lifeline for firms to survive—and hopefully thrive—in these circumstances. It allows firms to streamline their operations and maintain high service standards with fewer employees, giving them the time to focus on what matters most—their clients.

Advancements in technology won’t be slowing down anytime soon. And in 2025, the integration of automation, artificial intelligence, machine learning, and blockchain will redefine how tax and accounting firms operate. Firms can automate routine tasks, reduce human error, enhance security, and provide real-time compliance updates—all without the need for massive staffing increases.

Implementing automation is really the only way forward for firms that want to survive while freeing up resources to focus on more strategic, high-value tasks like financial advisory services, client relationship management, and long-term financial planning. Firms that resist automation may find themselves overwhelmed by the growing complexity of changes in the tax and accounting profession.

In the year ahead, automation trends—ranging from tech stack consolidation to AI-driven client portals—are set to transform the tax and accounting profession. And for those firms looking to future-proof their businesses, automation is the answer. Let’s explore the seven trends you’ll want to watch in 2025.

Prediction One

Automation will streamline workflows and reduce manual tasks, making firms more efficient even amid the accounting staffing crisis.

As the CPA staffing crisis continues, firms have to find ways to maintain service quality with smaller teams. In 2025, we’re going to see more of a shift toward automating specific, time-consuming tasks that have traditionally required manual effort.

This won’t be about replacing accountants—it’ll be about empowering them to focus less on tedious tasks and more on higher-value work. Too many firms waste time on repetitive tasks that can be automated, such as:

Document management. Automated systems can handle the collection, sorting, and storage of client documents, in a secure environment. This eliminates the need for manual filing and organization (or chasing down clients for missing documents). We don’t have to tell you how much time is saved during busy season with a document management system in place.

Client communications. Imagine applications that send reminders automatically to manage routine client interactions, like requesting documents, following up on missing information, or sending status updates. Well, these applications already exist. And they help ensure consistent communication without burdening staff or requiring manual intervention.

Data entry and validation. Automated data extraction tools can populate tax forms and financial reports directly from source documents, reducing manual entry time and—most importantly—data errors.

Compliance monitoring. It’s no secret that tax laws and regulations change faster than you can say “tax laws and regulations.” And that means trying to keep up with a moving target. Automated tracking systems monitor deadlines, requirements, and changes in regulations, ensuring nothing falls through the cracks, even with reduced staff.

The staffing crisis isn’t going away anytime soon. But by strategically implementing automation tools, firms can ensure they’re making the most efficient use of their most valuable resource—their people. In 2025, the successful firms won’t be the ones with the most staff (one can dream, though, right?); they’ll be the ones that have figured out how to optimize their workflows through smart automation.

Prediction Two

Firms will consolidate their tech stacks, opting for purpose-built, all-in-one platforms designed specifically for tax and accounting.

The surge of automated software tools for accounting and tax has created a new problem for firms—tech stack fatigue. Firms have unintentionally drifted into app sprawl in their search for the best new applications (Shiny object syndrome, anyone?) that would help their practice. They’re using multiple tools to handle billing, payroll, reporting, compliance, tax filings…the list goes on.

This abundance of software creates a complex environment that leads to reduced productivity, wasted time, and increased costs. (Not quite the goal firms are hoping to achieve by adopting automation.) And in a profession experiencing a staffing shortage, firms need to streamline their operations to simplify processes, lower costs, and operate more efficiently with a smaller staff.

Many firms still rely on general business solutions like Adobe for PDF management or DocuSign for eSignatures, rather than using purpose-built solutions designed specifically for tax and accounting workflows. These general solutions weren’t created with the unique needs of accounting firms in mind, meaning their functionality isn’t cut out for the intricacies of tax workflows, compliance requirements, or the security needs of financial data.

In 2025, I expect firms to consolidate their tech stacks and use all-in-one platforms that integrate the essential tools they need into a singular interface. These platforms not only reduce the need for staff to switch between multiple applications, but they also improve workflow efficiency in ways that matter most to accounting firms. Staff spends less time on administrative tasks like sending reminder emails to clients about missing documents, chasing signatures for e-file authorizations, or manually tracking the status of returns across multiple systems. Instead, end-to-end automated workflows handle these routine communications and tracking tasks, giving their teams more time to focus on higher-value work like tax planning and advisory services.

Prediction Three

Firms will rely on AI to deliver proactive insights that allow for strategic decision-making.

Artificial intelligence (AI) and machine learning (ML) have already started transforming tax and accounting firms, but I believe their role in predictive analysis will become even more prominent in 2025. Firms are treasure troves of data, but who has the time to sift through it all to create financial reports or identify anomalies before the data is, well, outdated?

No one, that’s who.

For example, firms can use AI to analyze historical tax data and detect patterns that suggest opportunities for optimizing tax filings. Rather than waiting for errors or inefficiencies to be flagged during audits, AI can proactively suggest adjustments to save clients money or reduce audit risks. Plus, ML algorithms can help firms predict cash flow issues or identify financial risks before they become significant problems.

AI and ML offer several other benefits, including:

Improved accuracy: AI reduces human error through data-driven insights, which increase the accuracy of tax filings, financial reports, and risk assessments.

Increased efficiency: Automating predictive analytics helps firms save time on manual and repetitive tasks, which allows staff to focus on more value-added activities like advisory services.

Scalability: As the staffing crisis continues and the amount of data increases, AI can analyze massive datasets quickly and efficiently, enabling firms to do more with less.

Real-time insights: AI provides real-time analysis, ensuring firms make faster and more informed decisions on the latest available data.

Risk mitigation: ML algorithms continually learn and improve over time, helping firms stay ahead of risks by predicting potential issues before they arise.

But before firms begin implementing AI, they must first address a critical concern: data privacy and security. Firms have an ethical and legal obligation to protect client data. And that means carefully vetting AI tools and establishing data governance policies. Consider the following:

Regulation compliance. Firms must adhere to data protection laws, such as the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CPPA) in the US, which mandate strict guidelines on data handling and privacy.

Internal AI policies. Developing comprehensive AI policies is crucial. These should outline ethical considerations, data privacy measures, and compliance with industry standards.

Ethical data handling. Establishing guidelines for ethical data handling ensures that AI applications respect client confidentiality and privacy. And this involves maintaining quality control and accuracy and setting clear boundaries for AI autonomy.

Remember: The power of AI comes with great responsibility. Firms that successfully implement AI in 2025 will be those that balance innovation with robust data privacy practices, ensuring they maintain their clients’ trust while benefiting from technology that provides better insights.

Prediction Four

Blockchain technology will play a critical role in ensuring secure, tamper-proof financial transactions.

While blockchain technology has primarily been associated with cryptocurrencies, we expect it to find a new home in the tax and accounting profession in 2025. I see blockchain being widely adopted as a secure and transparent method for processing transactions and reducing the risk of data breaches and fraud.

Because blockchain uses a distributed ledger system, once data is entered, it can’t be altered without the consensus of the entire network, and that creates a secure and auditable (i.e., time-stamped) transaction record. This ensures that records like financial statements or tax filings are tamper-proof and easily verifiable. For tax professionals, this technology offers a significant advantage during audits as it provides an indisputable record of transactions, reducing the time and complexity involved in verifying documents.

Firms that adopt blockchain will also benefit from enhanced security when handling sensitive client information because its architecture provides a robust defense against hacking and data breaches. This will become increasingly important as cyberthreats continue to evolve.

Prediction Five

Firms will invest in AI-driven client portals that offer tailored services to improve client satisfaction and retention.

Last year, we predicted that firms would invest in a remote taxpayer experience or risk losing clients. While firms took steps to enhance the client experience with digital tools, I think it will go further in 2025. Why? Because these days, clients expect personalized experiences tailored to their needs. That means more than addressing them by name in an email—it involves using data, AI, and automation to customize every interaction based on a client’s unique needs, preferences, and behaviors.

I expect hyper-personalized client portals powered by AI to become standard within tax and accounting practices. These portals will serve as a central hub where clients can interact with their financial data, submit tax documents, and access reports. And they’ll offer several benefits, such as:

Increased client engagement: Personalized experiences help clients feel more connected, which leads to deeper relationships and higher engagement with your firm.

Enhanced efficiency: A client portal reduces the amount of time spent on manual client communications, freeing up your already understaffed firm to spend time on providing valuable advisory services.

Improved client retention: When your firm offers tailored and proactive services, you increase client satisfaction and loyalty, which reduces churn and helps boost long-term relationships.

If firms want to build strong, lasting client relationships, they’ll need to embrace the trend of personalized client portals. Without that, they run the risk of losing valuable clients to firms that have implemented the personalization that clients crave.

Prediction Six

Real-time compliance monitoring will ensure firms quickly adapt to regulatory changes without the need for larger compliance teams.

It’s no secret that tax laws go through changes every year. From regulations being altered, added to, or removed, staying in the know and complying with these changes is a significant challenge for accounting firms.

Traditionally, monitoring for regulatory changes and ensuring compliance has required a substantial amount of manual effort, making a dedicated team necessary. However, automated compliance monitoring systems can track changes in tax laws, update workflows, and flag compliance risks as they arise, which helps firms maintain accuracy and avoid stiff fines and penalties. In 2025, I believe we’ll see firms adopt real-time compliance monitoring to ensure they stay on top of regulatory changes without the need for dedicated compliance teams.

Prediction Seven

Traditional tax organizers will go extinct as firms embrace digital alternatives.

Tax organizers have been a staple of the accounting profession for decades. And many firms still rely on these comprehensive questionnaires to gather client information. While they serve an important purpose—ensuring a thorough collection of data and maintaining consistency on a yearly basis—the traditional paper or PDF organizer is increasingly at odds with how modern clients prefer to interact with their accountants.

The shift toward digital alternatives isn’t just about going paperless; it’s about meeting clients where they are and providing a more intuitive experience. Digital collection methods guide clients through the process step-by-step, while automatically flagging missing information and integrating directly with popular tax prep software, like Intuit Lacerte®, UltraTax CS®, GoSystem® Tax RS, and CCH Axcess™.

Another major factor is ever-decreasing organizer adoption rates. Firms aren’t getting the information they need from traditional organizers because clients don’t want to invest the time it takes to fill them out. It’s an obvious pain point for clients, but for firms it’s a massive inefficiency—they have to manually track down that information through other means.

While traditional organizers still have their place, especially for clients who prefer familiar processes, I expect to see a continued evolution toward more dynamic and interactive digital solutions that combine the thoroughness of traditional organizers with the convenience and efficiency of modern technology. Who doesn’t want to see everything tax-related in one centralized online location or get automated reminders when something is due?

This transformation isn’t about abandoning traditional and proven principles that make tax organizers valuable. It’s about enhancing the process to offer the streamlined and user-friendly experience clients increasingly expect. Going digital also improves completion rates for organizers, and that’s good for everyone—clients and firms.

What It All Means Going Forward

The future of tax and accounting lies in automation—because it has to. Unless strides are made to entice younger generations to consider a career in tax and accounting, the staffing crisis will only get worse. Firms must lean into implementing automation, or they risk falling behind—or worse, going out of business.

From advanced integrations and tech stack consolidation to real-time compliance monitoring and traditional tax organizers coming to an end, the next generation of automation tools stands poised to improve efficiency and enhance security, compliance, and client satisfaction, all while maintaining a high level of service with fewer employees.

Firms that embrace these trends will be better equipped to navigate the challenges posed by the staffing crisis. As we’ve learned, automation is no longer a luxury for tax and accounting firms—it’s a necessity. And the firms that act now to adopt these technologies will be the ones that not only survive but thrive. But those who resist? They may find themselves left behind in an increasingly competitive field.