There is no doubt that AI is rapidly gaining traction across nearly every sector of the global economy. According to the 2025 Generative AI in Professional Services Report from the Thomson Reuters Institute, AI adoption rates nearly doubled in just one year, rising from 12% in 2024 to 22% in 2025. This growth isn't necessarily a disruptive overhaul, but a steady evolution of how professionals work — and that includes tax and accounting.
In just 12 months, the number of tax and accounting professionals who believe they should apply AI to their daily work has surged from 52% to 71%. This marks a turning point for the profession, with 79% of firms anticipating significant AI integration by 2027.
As with any transformative technology, questions remain — particularly about job security and the role of the human expert. The reality is that AI is not intended to replace tax professionals but to enhance their capabilities by automating routine manual tasks and enabling deeper, more strategic client engagement.
This white paper explores the basics of AI from a tax-and-accounting perspective, what it means for the future of the profession, and how firms can embrace this shift to unlock new levels of productivity and value.
Understanding AI: A practical guide for tax professionals
AI is no longer a futuristic concept for the tax and accounting profession — it’s a practical, everyday tool that’s transforming how firms operate.
If you're a tax professional who hasn't fully explored AI yet, you're not alone. Many practitioners are still learning what AI can do and, more importantly, what it means for their daily work. The good news? You don't need to be a technology expert to benefit from AI — you just need to understand the basics.
What is AI, really?
At its core, artificial intelligence (AI) refers to computer systems that can perform tasks typically requiring human intelligence. For tax professionals, this means software that can read documents, analyze data, identify patterns, and even make recommendations based on complex tax rules — all without constant manual input.
Think of AI as a highly capable assistant that never gets tired, can process massive amounts of information instantly, and learns from experience. However, it still needs your professional judgment to validate its work and make final decisions.
Why AI matters for your practice
The tax profession faces real challenges — tight deadlines, increasing regulatory complexity, client demands for faster turnaround, and persistent staffing shortages. AI directly addresses these pain points:
- Reduces time spent on repetitive tasks like data entry and document review
- Improves accuracy by catching errors and inconsistencies that humans might miss
- Scales your capacity during the busy season without adding headcount
- Frees you to focus on advisory work that generates higher revenue and client satisfaction
Learn key concepts for driving AI adoption
To better understand the direction AI technology is heading, let's take a look at some essential terminology and components driving its adoption and how they relate to the day-to-day work of tax and accounting professionals.
Artificial intelligence (AI) refers to the simulation of human intelligence by machines, enabling them to perform tasks such as learning, reasoning, and decision-making. In tax and accounting, AI can streamline workflows, automate data analysis, improve compliance, and enhance decision-making.
Generative AI (GenAI) creates new content — such as text, code, or images — by learning patterns from existing data. From a tax and accounting perspective, it can draft reports, generate client correspondence, and assist with research by providing natural-language summaries of complex regulations.
Machine learning (ML) is a subset of AI in which systems improve their performance on tasks over time through exposure to data without explicit programming. It is widely used in accounting software to detect anomalies, categorize transactions, and forecast financial trends.
Agentic AI refers to AI systems that can autonomously make decisions and take actions to achieve goals, often across multiple steps or tools. In accounting, such agents could proactively manage tasks such as scheduling audits, monitoring regulatory changes, and preparing client-ready deliverables.
Large-language models (LLMs) are AI models trained on vast amounts of text data to understand and generate human-like language. These models power tax research assistants and chatbots that help tax professionals interpret IRS guidance or navigate complex tax codes.
Retrieval-augmented generation (RAG) combines generative AI with search capabilities, pulling relevant information from external sources before generating a response. This technique helps ensure that AI-generated answers in accounting contexts are grounded in the most current and authoritative data.
Bias in AI models occurs when they reflect or amplify prejudices in their training data, leading to skewed or inaccurate outcomes. In tax and accounting, this can affect decision-making fairness or lead to incorrect assumptions in client-facing outputs.
Deep learning is a type of machine learning that uses neural networks with many layers to analyze complex patterns. It underpins powerful AI capabilities like document classification, fraud detection, and automated image or voice recognition in accounting tools.
Hallucinations are instances in which an AI model generates false or misleading information that appears plausible. In tax research or compliance contexts, this can pose risks if unchecked, highlighting the need for human review and trustworthy data sources.
Natural-language processing (NLP) enables computers to understand, interpret, and generate human language. In the tax and accounting domain, NLP powers search tools, virtual assistants, and automated document analysis, making it easier to extract insights from unstructured data.
A prompt is the input or question given to an AI model to initiate a response. In generative AI, crafting clear and precise prompts is essential to obtain relevant and accurate outputs — especially in high-stakes fields like tax advisory or audit.
An AI agent is a software entity that can perform complex tasks autonomously by interacting with tools, data, and users. In accounting, AI agents can serve as intelligent assistants, helping tax professionals complete tax filings, conduct audits, and respond to client inquiries more efficiently.
How tax professionals use AI today: Real-world applications
Tax professionals across the country are already putting AI to work in practical and impactful ways. The following are how firms like yours are using AI right now.
Tax research and compliance
AI-powered research tools help professionals quickly find relevant tax codes, IRS rulings, and case law. Instead of spending hours searching through multiple sources, you can ask questions in plain language and receive authoritative answers with citations — saving valuable time during client consultations and return preparation.
Document review and data extraction
AI can automatically review client documents like W-2s, 1099s, K-1s, and prior-year returns to extract relevant data and populate tax forms. This capability eliminates manual data-entry errors and dramatically speeds up the preparation process, especially during the busy season.
Tax-return preparation
Advanced agentic-AI solutions like Ready to Review modernize 1040 tax return preparation by using AI agents to process source documents and prior-year returns, extract and categorize data, and generate returns that are ready for professional review. Firms using Ready to Review have seen return preparation time reduced by approximately one hour per simple 1040, allowing professionals to handle higher volumes while maintaining quality.
Tax planning and advisory
AI-powered advisory solutions like Ready to Advise help firms grow their strategic advisory services by taking client tax data from returns and using it to surface strategies tailored to each client's unique situation. The solution provides all levels of staff with confidence, expertise, and decisive artifacts needed to execute on tax-planning strategies, democratizing expertise across the firm.
Anomaly detection and risk assessment
AI continuously analyzes client data to flag unusual transactions, potential errors, or audit risks before returns are filed. This proactive approach helps you catch issues early and provide better guidance to clients.
Client communication and engagement
AI helps draft client emails, prepare engagement letters, and create customized tax-planning presentations, freeing up time for face-to-face client interactions while ensuring consistent, professional communication.
The results speak for themselves. More than three-quarters of tax, audit, and accounting professionals believe AI will have a high or transformational impact over the next five years, and respondents also predict that AI will save them five hours per week.
AI is reshaping tax and accounting
The journey of ChatGPT from a general-purpose chatbot to a professional-grade research and productivity tool reflects broader advancements in AI. Early versions struggled with the nuance and complexity of tax and legal language. But today, more advanced models like GPT-4 have demonstrated remarkable proficiency, including scoring in the 90th percentile on the bar exam and accurately performing complex tax scenarios when prompted to act as a tax advisor.
According to the 2025 Generative AI in Professional Services Report, 40% of professionals already use publicly available tools such as ChatGPT, and the use of industry-specific tools is expected to rise over the next few years. Respondents also believe that generative AI will be a central part of professional services organizations' workflow within the next five years, if not sooner.
To successfully apply AI, however, tax and accounting professionals must look beyond publicly available tools. An industry-specific AI-driven platform purpose-built for tax, audit, and accounting professionals will become a crucial differentiator, empowering tax professionals to deliver personalized insights and elevate tax planning and advisory services.
How tax and accounting professionals put AI to work
The professional services report found that tax research and tax-return preparation remained the most common AI use cases within the tax, accounting, and audit space. Notably, the proportion citing accounting and bookkeeping fell to 57% in 2025, from 79% in 2024, when it was the top use case. Tax advisory, meanwhile, rose 9 percentage points to become the third-most cited use case in 2025.
For one simple reason, AI is gaining momentum. It helps professionals do more of what matters faster — and with greater accuracy. Whether it's streamlining compliance tasks, analyzing complex data, or supporting client interactions, AI has become a powerful ally for the modern accountant.
But let's be clear, AI isn't here to replace you as a tax professional. It's here to work with you, serving as a digital sidekick that handles the repetitive, time-consuming parts of your job so you can focus on strategy, insights, and client relationships. The most successful firms today aren't just experimenting with AI; they're integrating it thoughtfully into their workflows to gain a clear competitive advantage.
Practical ways to use AI in your firm
Here's how you can start harnessing AI right now to improve your daily operations and enhance client service:
Automate the basics
The implementation of AI-powered tax technology is taking over routine tasks like data entry, invoice processing, and bank reconciliations. By reducing manual effort in tax prep and documentation, you can shift your focus to more lucrative tax advisory work.
Streamline tax return preparation
Solutions like Ready to Review automate routine tasks, increase efficiency, and free professionals to focus on higher-value advisory work, transforming how you handle 1040 preparation. Firms can handle higher volumes during peak season while maintaining accuracy and quality.
Scale your advisory services
Ready to Advise helps firms scale their advisory services by spreading expertise throughout the entire firm, providing all levels of staff with the confidence, expertise, and critical artifacts needed to execute tax-planning strategies. Ready to Advise and Ready to Review are complementary and work together seamlessly, with the time saved enabling more advisory services and truly transforming how tax and accounting professionals deliver value to their clients.
Enhance client advisory services
AI doesn't just crunch numbers; it interprets them. Use AI-driven insights to flag anomalies, detect trends, and offer proactive recommendations that boost your ability to provide clients with advisory services.
Speed up research and documentation
Industry-specific, AI-powered tax research can help you quickly find relevant tax codes, rulings, and authoritative guidance — saving time and improving accuracy in complex research tasks.
Create more engaging client communications
Effective communication, supported by AI-powered tools, helps set expectations, build trust, and streamline processes such as document collection, e-signature, and status updates. This optimization creates stronger client retention and more referrals.
Analyze data — fast
Whether it's thousands of transactions, payroll entries, or unstructured financial documents, AI can sift through large volumes of data using techniques like predictive analytics and anomaly detection. These time savings free up your time to focus on what the data means for your clients.
Building trust in professional-grade AI
If you're hesitant about using AI in your practice, that's understandable. Tax work involves high stakes: IRS scrutiny, client trust, professional liability, and regulatory compliance. The question isn't whether AI can help, but whether you can trust it to get things right.
This is where professional-grade AI makes all the difference.
What makes AI ‘professional grade’?
When evaluating options, it’s important to know that not all AI is created equal. Consumer AI tools like ChatGPT are trained on general internet content, which can include outdated, inaccurate, or irrelevant information. Professional-grade AI, by contrast, is:
- Built specifically for tax and accounting. It is trained on authoritative sources like the Internal Revenue Code, IRS rulings, FASB standards, and trusted editorial content.
- Designed with professional standards in mind. It is developed in collaboration with CPAs, tax attorneys, and industry experts who understand your workflow and obligations.
- Engineered for transparency and explainability. It provides citations and reasoning for its recommendations, so you can verify the source and trust the output.
- Maintained with continuous updates. It reflects current tax law changes, regulatory updates, and industry guidance.
- Fortified with security and privacy. It protects sensitive client data with enterprise-grade security measures.
Why trust matters in AI adoption
Trust is the difference between helpful AI and unreliable AI. In tax and advisory work, the risk of being "mostly right" is real — regulatory compliance, professional liability, and client confidentiality are areas where mistakes can have serious consequences.
When you use AI that isn't designed for professional use, you can introduce avoidable risk into your workflow, including:
- Inaccurate or outdated tax guidance that could trigger audits or penalties
- Lack of citations or supporting documentation for your work
- Exposure of confidential client information
- Reliance on "hallucinated" content that sounds plausible but is factually wrong
Professional-grade AI eliminates these risks by grounding every recommendation in verified, authoritative sources and maintaining the transparency and accountability your profession demands.
The human + AI partnership
Even the best AI is not a replacement for your expertise. Professional-grade AI is designed to work with you, not replace you.
In practice, this means AI handles data gathering, document review, and initial analysis, then provides recommendations with confidence scores and supporting citations. You then review, validate, and make final decisions based on your professional judgment. The system learns from your feedback and continuously improves future performance.
This collaborative approach ensures you uphold the professional standards and ethical obligations your clients expect while benefiting from AI's speed and analytical power.
The importance of transparency, accountability, and explainability with AI
As AI becomes more integrated into tax and accounting workflows, building trust in these systems is no longer optional; it's essential.
Trust is foundational to the professional services industry, and when AI is involved in high-stakes work like tax compliance, audit accuracy, or financial analysis, clients and professionals alike need to understand how and why decisions are being made.
Without trust, even the most powerful AI tools risk rejection or underuse. That's why transparency, accountability, and explainability must be core design principles in AI adoption.
Transparency
It’s essential to make the inner workings of AI systems visible and understandable to users. In tax and accounting, this includes understanding where the AI pulls its data from, how it processes that information, and what logic drives its recommendations.
For example, if an AI suggests a tax treatment for a specific transaction, professionals must be able to trace the sources and reasoning behind that conclusion. This citation includes sources from the Internal Revenue Code, IRS rulings, or trusted content like Checkpoint. Transparency fosters confidence and empowers users to engage critically with AI-generated outputs.
Accountability
Ensuring that human professionals remain responsible for decisions made with the support of AI tools is paramount. While AI can streamline tasks and uncover insights, it's not a substitute for professional judgment. Firms should establish clear guidelines for oversight, review, and auditability of AI-driven processes. This oversight is especially important when using agentic AI, so there's always a mechanism for human intervention when needed, even when conducting audits.
By keeping humans in the loop, you can uphold ethical standards and professional obligations while maintaining personal connections with clients.
Explainability
User trust stems from an AI system's ability to clearly articulate how it arrived at a particular output. This ability is crucial in regulated industries like tax and accounting, where professionals must justify their decisions to clients, regulators, and internal stakeholders.
Explainability goes beyond surface-level reasoning, requiring AI systems to provide interpretable and plain-language rationale that aligns with domain-specific knowledge. Tools like CoCounsel — which provides citations, context, and source-based reasoning — represent a step forward in making AI both useful and trustworthy.
Ultimately, building trust in AI is about aligning the technology with the values and standards that tax and accounting professionals already uphold. By prioritizing transparency, accountability, and explainability, you can ensure your AI tools not only deliver results but also reinforce the integrity and professionalism your clients expect.
The power of AI: A strategic shift toward value
The tax and accounting industry is entering a new era, one where AI and emerging technologies are transforming how firms operate, serve clients, and grow. While the journey to AI adoption may come with its share of hurdles, the rewards are substantial:
- Increased efficiency
- Deeper insights
- Stronger client relationships
With the right partners and tools, your firm can move beyond compliance work to deliver high-value, strategic services that truly make a difference.
That's why Thomson Reuters is leading the way. We’re helping firms navigate and capitalize on this shift with our AI-powered tax and accounting solutions. Whether you're just getting started or looking to scale your AI capabilities, we're here to support your success — so you can embrace this change with confidence and unlock new levels of performance and profitability.
Ready to start your AI journey?
To identify where you are today and what steps you can take next to transform your practice with AI, take our interactive AI assessment quiz.
