Accounting Firms Shift Budgets to Tech as Staffing Crisis Deepens
New survey data reveals a dramatic realignment of accounting firm budgets, with technology investment rapidly becoming the cornerstone of sustainable growth amid intensifying staffing shortages.
The accounting profession is undergoing a period of unprecedented change. As the availability of qualified staff shrinks, advancements in artificial intelligence (AI) are enabling firms to automate and streamline tax workflows previously considered impossible. This shift is forcing a critical question: are accounting firms budgeting for the future, or clinging to outdated models?
Where Accounting Firm Budgets Are Trending
Traditionally, the vast majority of accounting firm budgets were allocated to human capital, with technology receiving minimal investment. However, forward-thinking firms are now reversing this trend. According to Accounting Today’s 2025 Year Ahead survey, technology now accounts for 21% of accounting firm budgets – a significant increase signaling a fundamental shift in priorities.
Large Firms Lead the Way in Tech Investment
The gap in technology spending between large and small firms is substantial. Findings from the Thomson Reuters 2024 Tax Firm Technology Report indicate that large accounting practices allocate, on average, 30 times more to technology than their smaller counterparts. Even mid-sized firms spend less than one-ninth of what larger firms invest, despite relatively similar staffing levels.
This disparity suggests that larger firms recognize a clear advantage in increased technology spending, a benefit that the rest of the industry may be slow to embrace. “Top accounting practices are all in on new tech,” a senior official stated, highlighting the growing recognition of technology’s transformative potential.
What’s Driving the Push Toward Technology?
The primary driver behind this surge in technology investment is the escalating challenge of attracting and retaining talent. A 2025 State of Tax Professionals Report found that hiring and retention were the top concerns for respondents. This concern is well-founded, as the number of U.S. accounting graduates reached a 20-year low in 2024, according to a trends report by AICPA.
This dwindling pipeline has resulted in an aging workforce, with many professionals already in management or nearing retirement. Firms are actively seeking solutions to alleviate the ongoing staffing squeeze. According to 2025 Thomson Reuters survey data, efficiency and increasing technology were the top two strategic priorities for tax firms, representing an 11% and 8% increase, respectively, from the previous year. However, only 39% of respondents reported having a clearly defined strategy for growth.
Gauging the Impact of Modern Automation
While the desire for technology adoption is strong, a gap remains between aspiration and action. However, firms that have proactively upgraded their tech stacks are already realizing significant benefits.
On average, tax professionals still dedicate over half of their time to repetitive, manual tasks. Yet, data from CPA.com shows that some firms have achieved over 80% automation of the tax preparation process. Furthermore, large language model-based research tools are reducing document analysis time by 50% or more. Tasks that once consumed hundreds of billable hours per tax season can now be completed in minutes, freeing up professionals to focus on higher-value advisory services that command premium fees.
Tax Technology Solutions for All Firm Sizes
Some leaders of small and mid-sized firms believe they are excluded from accessing cutting-edge automation due to budget constraints. However, industry-leading solutions from Thomson Reuters are accessible to accounting firms of all sizes. Examples include:
- SurePrep 1040SCAN: Automates individual return data entry, eliminating hours of manual transcription for junior staff.
- SPbinder: Organizes source documents and workpapers, reducing time spent searching for information during preparation and review.
- SafeSend: Streamlines final delivery by managing client signatures, payments, and document delivery through a single portal.
- CoCounsel Tax: Provides AI-powered research capabilities, compressing complex code analysis from hours to minutes.
The common thread across these solutions is their focus on addressing specific operational bottlenecks within each client engagement. Rather than investing in broad-platform solutions, firms can deploy specialized tools to generate concrete efficiency gains for years to come.
Planning a Modern Accounting Firm Budget
The documented technology spending patterns paint a clear picture: funds previously allocated to seasonal staff are now being directed toward tangible, year-round automation. Data entry that once stretched late into the night can now be completed in the early afternoon. During your accounting firm’s next budget planning meeting, remember to weigh the immediate savings against the potential losses of remaining behind the curve in three years.
To learn more, register for the webinar “Defining ROI: How tax firms are justifying AI investments” for insights, statistics, and guidance from software experts. Watch recording ↗
