Tax firms across all sizes are grappling with a worsening talent crisis that demands targeted, size-specific strategies around training, retention, and capacity management to protect firms鈥� capabilities and long-term growth
Key highlights:
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Training investment remains dangerously low across the profession 鈥� Despite training being one of the most effective responses to the talent crisis, fewer than half of all tax firms take an intentional, strategic approach to personnel development.
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Midsize firms bear the heaviest talent burden 鈥� Squeezed from both sides of the market, on1-in-5 professionals at midsize tax firms identify talent shortage as their firm鈥檚 top obstacle.
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Firm size shapes both vulnerability and the path forward 鈥� While large firms hold a structural advantage with more than two-thirds operating intentional training programs, the most effective solutions are tailored by firm size.
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Tax & audit firms of all sizes face a persistent talent crisis that demands size-appropriate strategies to avoid crippling their service capabilities, growth, and long-term viability, according to the recent 2026 State of Tax Professionals Report from the Thomson Reuters Institute.
While the profession has long acknowledged this problem, the data makes clear that acknowledgment alone is not enough. The talent shortage in the tax industry is the central challenge from which nearly every other operational problem flows.
Scope and magnitude of the talent crisis
The talent pipeline for tax & auditing professionals has been shrinking for years, as senior practitioners retire at a steady pace, new entrants are not arriving in sufficient numbers to replace them, and competition for qualified candidates among firms grows more fierce.
The downstream consequences are severe and becoming more acute, such as overwork among existing staff, widening skills gaps, constrained capacity, and a diminished ability to expand into advisory services or adopt new technologies.
What makes this crisis particularly stubborn is how interconnected it is with every other challenge that tax firms face today. Talent shortages limit what services a firm can offer, cap its growth potential, and complicate its succession planning. This atmosphere affects the quality of leadership and strains day-to-day decision-making. Simply put, a firm that cannot hire and keep the right people is a firm that is slowly losing ground.
Training and development programs represent one of the clearest levers that tax & audit firm leaders can pull, yet fewer than half of all tax firm professionals surveyed say their firms take an intentional, strategic approach to personnel development. Indeed, investment in people is among the most direct responses available to firms struggling with talent, and yet, the majority of firms still have not made it a formal priority.
Firm size shapes vulnerability and strategy
Not all firms experience the talent crisis in the same way. Firm size can shape both the nature of the pressure and the resources available to respond to it, and understanding those differences is essential to crafting effective solutions.
Midsize tax & audit firms, those with between 4 and 30 professionals, bear the heaviest burden. They face competition from larger firms when recruiting young talent, and they struggle to retain quality staff who may be drawn away by more attractive opportunities elsewhere. More than 20% of midsize firm respondents identify talent shortage as their firm鈥檚 single biggest obstacle to achieving its goals; and a similar portion say their firm’s capabilities are actively at risk because of talent challenges. Moreover, 30% describe their firm鈥檚 capabilities as constrained, routinely settling for less-than-ideal hires and finding it difficult to grow or diversify their service offerings as a result.
Larger tax & audit firms are not immune. Almost 1-in-3 large firm respondents say their firms are constrained by talent issues. However, large firms also hold meaningful advantages, which include being better positioned to attract diverse, high-quality candidates, and being more likely to employ specialists whose expertise can serve as a genuine competitive differentiator. Two out of three large firms have intentional training programs with dedicated budgets and defined development goals, the survey shows.
Talent pressure at smaller firms is relatively low, with only around 2% of small firm respondents identifying talent issues as their firm鈥檚 primary concern. At the same time, however, small firms face a more pressing danger of overworking. With lean rosters and limited redundancy, a single capacity problem can destabilize the entire operation.
Targeted solutions for building & retaining a capable workforce
Because firm size so directly shapes the talent challenge, the most effective responses are those built around a firm’s specific circumstances rather than borrowed wholesale from larger or better-resourced competitors. The goal of the following guidance is to develop solutions that are achievable given available resources and align with where the firm is trying to go:
For small firms, the priority is capacity management. Defining clear workload limits, deploying automation to extend individual capabilities, and building referral networks with peer firms for overflow work are practical, achievable steps that reduce the risk of burnout without requiring significant investment.
Midsize firms need to compete differently. They cannot match the salaries and perks offered by large firms, but they can offer better culture, flexibility, genuine career progression, and a sense of individual contribution that many large firms cannot match. Structured mentoring, apprenticeships, and targeted internal training are the tools that allow midsize firms to develop talent rather than simply compete for it.
Large firms, with their greater resources, should be investing in formal competency frameworks, dedicated training budgets, and development programs designed specifically around technology proficiency, advisory capabilities, and specialized skills. The firms that do this well are both solving a retention problem and building a durable competitive advantage.
The talent crisis in the tax profession will not resolve itself. And those tax & audit firms that treat it as urgent and build out solutions tailors to their size will be better positioned than those that are still waiting for the talent pipeline to refill on its own.
You can download a copy of the Thomson Reuters Institute鈥檚聽2026 State of Tax Professionals Report here
