CPA Practices NAICS 541211

Oct 15, 2025 - IRS Releases New 2026 Tax Brackets

• The IRS released the 2026 federal income tax brackets, reflecting inflation adjustments under current tax law. Lower brackets increased by 4%, while higher brackets rose by 2.3%, resulting in an overall adjustment of 2.7%. This adjustment changes the income thresholds for each bracket. The top 37% tax rate will apply to income above $640,600 for individuals and $768,700 for married couples filing jointly. The standard deduction is set at $16,100 for individuals and $32,200 for married couples. The child tax credit remains at $2,200, and the SALT deduction cap increases to $40,400. The 0% capital-gains tax rate applies to incomes up to $49,450 for single filers and $98,900 for joint filers. The estate-tax exclusion rises to $15 million, up from $13.99 million. These adjustments, effective for 2026 tax returns filed in early 2027, update thresholds and limits across multiple tax provisions.
• Automation and AI are transforming how tax firms get work done, cutting out repetitive tasks and boosting accuracy, according to a recent The Future of Tax Automation webinar from Thomson Reuters. Nearly 80% of tax professionals believe AI will have a major impact on their industry within the next five years, and more than half of firms are already seeing returns from the investments they’ve already made. New tools like optical character recognition, automated verification, and generative AI can scan documents and pull out key data, cross-check for errors, and create detailed summaries. In addition, the Webinar estimated that AI would save accounting pros about 5 hours of busy work per week for a per employee added value to the organization of $24,000. The shift towards automation is especially important as accounting firms face heavier workloads and staffing shortages.

• CPA practices face a staffing shortage after several years of attrition through retirements and middle-aged CPA burnout that has left the accounting industry about 300,000 workers short with not enough fresh recruits to replace them. The US Bureau of Labor Statistics shows CPA firm employment flat throughout 2024 and for the first half of 2025, coming in at -0.2% year over year in June. The shortage is likely to affect CPAs and taxpayers alike. CPAs are overloaded with work - which makes them prone to mistakes and filing errors - leaving many without the bandwidth to take on new clients. Those lost clients can then potentially make their own mistakes doing taxes themselves, creating a domino effect of accounting headaches. The problem could be compounded by the IRS itself, which was already lacking enough accountants to efficiently process 2024 tax returns only to face a 30% auditor staff cut by the Trump administration.
• The US government ended the Internal Revenue Service’s Direct File program, a free electronic tax return system, in mid 2025. Direct File was created during the Biden administration and became quite popular for its time savings and ease of use. Tax prep firms and lobbyists claimed Direct File was unnecessary because free tax filing software programs already exist, although they are difficult to use. The program had been in a holding pattern since the Department of Government Efficiency (DOGE) targeted it for closure at the beginning of the year. The non-partisan Taxpayers Protection alliance supported the move and says Direct File costs too much and of the 450,000 taxpayers who logged into it for the 2024 tax season, only 140,800 of those filed a completed return. A pilot program when it started, Direct File had expanded to half of the US this year’s tax season before being axed.