Key takeaways:

• • • Country-by-country reporting will only increase in complexity — Australia’s enhanced Country-by-country reporting (CbCR) requirements — reconciling taxes accrued against taxes credited — are a preview of where other high-scrutiny jurisdictions are heading, and companies need to build that explanatory analysis capability now, systematically, rather than scrambling later.

    • There has to be a shared narrative from corporate teams — The EU’s public CbCR is a reputational event, not just a filing. So that means tax, communications, and investor relations teams need a shared narrative before the data goes public — inconsistencies create exposure you do not want to manage reactively.

    • Rethink your filing jurisdiction in light of changes — If EU filing jurisdiction was chosen at initial implementation and never revisited, look again. Guidance has matured, and a more efficient or better-suited option may now be available.

WASHINGTON, DC — Among the many pressing topics discussed in detail at the recent , country-by-country reporting (CbCR) and its ability to reshape the corporate tax industry, certainly had its place. Between escalating local jurisdiction requirements, the , and for deeper explanatory disclosures, CbCR has quietly evolved from a transfer pricing filing obligation into something far more strategically consequential.

The floor is just the floor

The creation of the by the Organisation for Economic Co-operation and Development (OECD) was intended as a minimum standard for countries. And now jurisdictions are increasingly layering additional requirements on top of the OECD’s basic template, resulting in a widening gap between the standard requirements and what tax authorities actually want.

Currently, Australia is the most pointed example. Australian tax authorities are now requiring multinational groups to go beyond the standard CbCR data fields and provide explanatory narratives that reconcile taxes accrued against taxes actually credited. This requires corporate tax departments to bridge the gap between financial statement accruals and their organizations’ cash tax positions in a way that is coherent, defensible, and consistent with positions taken elsewhere.

At the TEI event, panelists explained that for tax departments this will carry complex timing differences, deferred tax positions, or significant jurisdictional mismatches between booked and cash taxes. Indeed, this additional layer of scrutiny will need dedicated attention.

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The broader signal matters: Australia will not be the last jurisdiction to move in this direction. So that means that tax departments should treat Australia’s approach as a leading indicator of where other high-scrutiny jurisdictions could be heading. Building the capability to produce this kind of explanatory analysis systematically — rather than scrambling jurisdiction by jurisdiction — would be the smarter long-term investment for corporate tax teams.

Public CbCR in the EU: The transparency ratchet has turned

For US-based multinationals with significant European operations, the EU’s public CbCR directive has fundamentally changed the calculus. Unlike the confidential tax authority filings most corporate tax departments are accustomed to, the EU’s public CbCR rules put organizations’ jurisdictional profit and tax data into the public domain, making it visible to investors, journalists, civil society groups, and organizations’ employees and customers.

The EU framework specifies which entities trigger the reporting obligation and which entity within the group is responsible for making the public filing. That scoping analysis is not always straightforward for complex multinational structures and getting it wrong could present both reputational and legal risk.

Choosing a filing jurisdiction is not purely an administrative decision — it is a choice that affects the regulatory environment that governs the disclosure, the language requirements, the timing, and the interpretive framework that applies to data.

For US-headquartered groups, the implications extend well beyond Europe. Public CbCR data is now being read alongside US disclosures, reporting on ESG activities, and public narratives about tax governance. Inconsistencies, including those technically explainable, could create unwanted noise about the company. This is clearly another reason why the tax function should partner across the business — in this case with the communications team — to make they both are aligned to tell the CbCR story instead of being caught off guard by a journalist or an investor during an earnings call.

Questions that US multinationals should be asking

Fortunately, US multinationals with multiple EU subsidiaries are not required to file public CbCR reports in every EU member state in which they have a presence. Instead, under the EU framework, a qualifying ultimate parent or standalone undertaking can satisfy the public disclosure requirement through a single filing in one EU member state, provided the relevant conditions are met. Germany and the Netherlands have emerged as two of the more popular choices for this consolidated filing approach, given their well-developed regulatory frameworks and the depth of available guidance on what compliant disclosure looks like in practice.

The strategic implication is meaningful. Choosing a filing jurisdiction is not purely an administrative decision — it is a choice that affects the regulatory environment that governs the disclosure, the language requirements, the timing, and the interpretive framework that applies to data. Corporate tax departments that defaulted to a filing jurisdiction early in the EU implementation process should take a fresh look. Regulatory guidance has matured significantly, and there may be a more efficient or better-suited path available than the one originally chosen.

The uncomfortable divergence

There is a notable irony in the current environment. Domestically, the IRS and U.S. Treasury’s 2025-2026 Priority Guidance Plan reflects an explicit focus on deregulation and burden reduction, detailing dozens of projects aimed at reducing compliance costs for US businesses. Meanwhile, the international compliance environment has moved in the opposite direction, adding disclosure layers, explanatory requirements, and public transparency obligations that many US businesses cannot avoid simply because they are headquartered in the United States.

This divergence has a direct implication for how tax departments allocate resources and make the internal case for investment in international compliance infrastructure. The burden internationally is not going down — indeed, it is intensifying — and that argument is now backed by concrete examples rather than projections.

3 things worth doing now

There are several actions that corporate tax teams should consider, including:

Audit CbCR data quality with Australia’s enhanced requirements in mind — If you cannot readily reconcile taxes accrued to taxes credited at the jurisdictional level, that gap needs to be closed before it becomes an authority inquiry.

Revisit EU filing jurisdiction strategy — If your jurisdictional decision was made at the time of initial implementation and has not been reviewed since, it is worth a fresh look before the next reporting cycle.

Develop an internal narrative around public CbCR data before it circulates externally — Your company’s tax story should not be a surprise to the corporate teams involved in communications, investor relations, or ESG — and in today’s world, assuming such news stays quiet is no longer a safe assumption.

While CbCR started as a tool for tax authorities, it today has become something more visible, more public, and more consequential than that — and that trajectory is not reversing any time soon.

You can download a full copy of the Thomson Reuters Institute’s

Key takeaways:

• • • Only IEEPA‑based tariffs are up for refund — Refunds will flow electronically to importers of record through ACE, the government’s digital import/export system, but only once CBP’s process is finalized.

    • Liquidation and protest timelines are now critical — An organization’s tax concepts that directly influence which entries are eligible and how long companies have to protect claims.

    • Tax functions must quickly coordinate with other corporate functions — In-house tax teams need to coordinate with their organization’s trade, procurement, and accounting functions to gather data, assert entitlement, and get the financial reporting right on any tariff refunds.

WASHINGTON, DC — When the United States Supreme Court issued its much-anticipated ruling on President Donald J. Trump’s authority to impose mass tariffs under the International Emergency Economic Powers Act (IEEPA) in February it set the stage for what it to come.

The Court ruled the president did not have authority under IEEPA to impose the tariffs that generated an estimated $163 billion of revenue in 2025. In response, the Court of International Trade (CIT) issued a ruling in requiring the U.S. Customs and Border Protection (CBP) to issue refunds on IEEPA duties for entries that have not gone final. That order, however, is currently suspended while CBP designs the refund process and the government considers an appeal.

AtĚýthe recent , tax experts discussed what this ruling means for corporate tax departments, outline what is and isn’t a consideration for refunds and the steps necessary to apply for refunds.

As panelists explained, the key issue for tax departments is that only IEEPA tariffs are in scope for refund — many other tariffs remain firmly in place. For example, on steel, aluminum, and copper; Section 301 tariffs on certain Chinese-origin goods; and new of 10% to 15% on most imports still apply and will continue to shape effective duty rates and supply chain costs.

So, which entities can actually get their money back?

Legally, CBP will send refunds only to the importer of record, and only electronically through the government’s digital import/export system, known as the Automated Commercial Environment (ACE) system. That means every potential claimant needs an with current bank information on file. And creating an account or updating it can be a lengthy process, especially inside a large organization.

If a business was not the importer of record but had tariffs contractually passed through to it — for example, by explicit tariff clauses, amended purchase orders, or separate line items on invoices — they may still have a commercial basis to recover their share from the importer. In practice, that means corporate tax teams should sit down with both the organization’s procurement experts and its largest suppliers to identify tariff‑sharing arrangements and understand what actions those importers are planning to take.

Why liquidation suddenly matters to tax leaders

As said, the Atmus ruling is limited to entries that are not final, which hinges on the . CBP typically has one year to review an entry and liquidate it (often around 314 days for formal entries) with some informal entries liquidating much sooner.

Once an entry liquidates, the 180‑day protest clock starts. Within that window, the importer of record can challenge CBP’s decision, and those protested entries may remain in play for IEEPA refunds. There is also a 90‑day window in which CBP can reliquidate on its own initiative, raising questions about whether final should be read as 90 days or 180 days — clearly, an issue that will matter a lot if your company is near those deadlines.

Data, controversy risk & financial reporting

The role of in-house tax departments in the process of getting refunds requires, for starters, giving departments access to entry‑level data showing which imports bore IEEPA tariffs between February 1, 2025, and February 28, 2026. If a business does not already have robust trade reporting, the first step is to confirm whether the business has made payments to CBP; and, if so, to work with the company’s supply chain or trade compliance teams to access ACE and run detailed entry reports for that period.

Summary entries and heavily aggregated data will be a challenge because CBP has indicated that refund claims will require a declaration in the ACE system that lists specific entries and associated IEEPA duties. Expect controversy pressure: As claims scale up, CBP resources and the courts could see backlogs. If that becomes the case, tax teams should be prepared for protests, documentation requests, and potential litigation over entitlement and timing.

On the financial reporting side, whether and when to recognize a refund depends on the strength of the legal claim and the status of the proceedings. If tariffs were listed as expenses as they were incurred, successful refunds may give rise to income recognition. In cases in which tariffs were capitalized into fixed assets, however, the accounting analysis becomes more nuanced and may implicate asset basis, depreciation, and potentially transfer pricing positions.

Coordination between an organization’s financial reporting, tax accounting, and transfer pricing specialists is critical in order that customs values, income tax treatment, and any refund‑related credits remain consistent.

Action items for corporate tax departments

Corporate tax teams do not need to become customs experts overnight, but they do need to lead a coordinated response. Practically, that means they should:

• • • confirm whether their company was an importer of record and, if so, ensure ACE access and banking information are in place now, not after CBP turns the refund system on.
    • map which entries included IEEPA tariffs, identify which are non‑liquidated or still within the 180‑day protest window, and file protests where appropriate to protect the company’s rights.
    • inventory all tariff‑sharing arrangements with suppliers, assess contractual entitlement to pass‑through refunds, and align with procurement and legal teams on a consistent recovery approach.
    • work with accounting to determine the financial statement treatment of potential refunds, including whether and when to recognize contingent assets or income and any knock‑on effects for transfer pricing and valuation.

If tax departments wait for complete certainty from the courts before acting, many entries may go final and fall out of scope. The opportunity for tariff refunds will favor companies that are data‑ready, cross‑functionally aligned, and willing to move under time pressure.

You can find out more about the changing tariff situation here

• • • Changing the balance of taxes — Budget‑driven tax swaps and incentive reforms are changing the balance between income, property, and sales taxes, forcing large companies to revisit their multistate footprint.

    • How revenue is sourced is changing, too — Rapidly evolving digital and AI‑related taxes are creating new nexus, sourcing, and base‑definition issues for businesses that rely on revenue from digital advertising, social platforms, data monetization, and automated tools.

    • Planning amid continued uncertainty — New federal tax regulations, tariff‑related uncertainty, and even the elimination of the penny are all amplifying state‑by‑state complexity for in‑house tax departments.

WASHINGTON, DC — Tax industry experts who gathered at to provide updates on the current landscape of state and local tax (SALT) policy and offer insight that corporate tax departments should consider found, not surprisingly, that they had a lot to talk about in the current economic environment.

Mapping the new SALT frontier

For starters, this year’s SALT agenda is not just an abstract policy story for large, multistate businesses, rather, it’s a direct driver of cash taxes, effective tax rate (ETR) volatility, and audit exposure. Indeed, several state legislatures are advancing new taxes on digital advertising and data, revisiting incentives and data center exemptions, and using conformity to federal law — especially the tax provisions in the One Big Beautiful Bill Act (OBBBA) — as a policy lever, all against the backdrop of slowing revenues and contentious elections.

“Tax swaps” and incentives — States that are facing budget pressure are, unsurprisingly, looking at tax swaps to reduce income or property taxes while broadening the sales & use tax base and trimming exemptions. For example, on March 3, the state of Florida — which already doesn’t have a state income tax — passed legislation that in the state.

Moreover, with the rapid expansion of AI come the extensive need for data centers. Several states are reassessing data center exemptions and credits, either tightening qualification standards, requiring centers to supply more of their own power, or repealing incentives outright. A decision in Virginia to , for example, is viewed as a potential template for other states, particularly in those areas in which energy and environmental concerns are priorities. At the same time, proposals targeting include expanded corporate tax disclosures, CEO compensation surcharges, and enhanced reporting on apportionment and group filing methods.

What companies should consider — Large companies operating over multiple states should consider making an inventory of their credits and incentives by jurisdiction, including looking at sunset dates and political risk indicators.

Companies should also build forward‑looking models that show how any sales tax base expansion would interact with their supply chain and their procurement of digital and professional services.

New exposure for tech, marketing & data

Bipartisan legislators in several states are continuing to expand on digital economies as a revenue and policy target. For example, Maryland continues to lead with its digital advertising tax; while Washington state’s expansion of its sales tax to include certain digital and IT services and Chicago’s social media taxes illustrate the variety of approaches that state and local jurisdictions are exploring to expand their tax base and raise revenue.

Data and “digital resource” taxes — Proposals in states such as New York would tax companies that derive income from resident data, treating data as a natural resource. While no state has fully implemented a comprehensive data tax, however, large platforms and data‑driven enterprises are monitoring these bills closely.

AI‑related SALT rules — Many states still classify AI solutions under existing Software as a Service (SaaS) or data‑processing categories, but some — including New York — are exploring surcharges tied to AI‑driven workforce reductions. And at least two states are explicitly taxing AI, similarly to the way software is taxed.

For corporate tax leaders, some practical next steps should include mapping those areas in which your group has digital ad spending, user bases, data monetization, or AI deployments. Then, overlaying that with current and pending digital tax proposals. In parallel, it is increasingly critical for the tax team to partner with IT and marketing teams to understand how contracts, invoicing structures, and platform design will affect nexus, tax base definition, and sourcing.

Federal shifts magnify multistate complexity

The OBBBA made permanent several of , while expanding SALT relief on the individual side and creating new interactions for multinational groups. Because most states start from federal taxable income — either on a rolling, static, or selective conformity basis — OBBBA changes reverberate across state corporate income tax bases, especially in those states that have decoupled themselves from interest limits, R&D expensing, or new production‑related incentives.

Corporate tax departments must now juggle different conformity dates and selective decoupling rules across rolling and static states, including jurisdictions that automatically decouple when a federal change exceeds a revenue impact threshold. This requires more granular state‑by‑state modeling of OBBBA impacts on apportionable income, deferred tax balances, and cash tax forecasts. It also heightens the risk that political disputes — such as — produce mid‑cycle changes that complicate provision and compliance processes.

Penny elimination — With federal , states now are moving toward symmetrical rounding for cash transactions, rounding the final tax‑inclusive total to the nearest five cents while attempting not to alter the underlying tax computation. For retailers and consumer‑facing enterprises, this shifts the focus to point of sale (POS) configuration, consumer‑protection exposure, and class‑action risk if rounding is implemented incorrectly.

Tariffs and refunds — The U.S. Supreme Court’s Learning Resources, Inc. v. Trump decision under the International Emergency Economic Powers Act in February leaves open how more than $100 billion in and what that means for prior sales & use tax treatment. Streamlined guidance generally treats tariffs embedded in product prices as part of the taxable sales price but excludes tariffs paid directly by a consumer‑importer from the tax base, raising complex questions if tariff refunds reduce costs or sales prices retroactively.

For indirect tax department teams, the confluency of the 2026 SALT changes — including the impacts around everything from data center credits to the recent Supreme Court tariff decision — the need to rely on internal partners across the business has never been stronger. Combining that with a greater reliance on technologies, including dedicated research tools to stay abreast of state-by-state tax changes, may be the best way for corporate tax teams to keep up with compliance requirements and avoid penalties.

You can download a full copy of here

Key insights:

• • • Possibilities vs. practicality — There is a growing frustration gap between what corporate tax professionals want to achieve and what their current technological tools will allow.

    • Expectations about AI — Tax professionals have significantly accelerated the timeframe in which they expect AI to become a central part of their workflow.

    • Proactive progress — Automation is enabling a gradual shift toward more strategic, proactive tax work, although not as quickly as many tax professionals would like.

The recently released , from the Thomson Reuters Institute and Tax Executives Institute, reveals that while automation of routine tax functions is indeed enabling a long-desired shift toward more strategic, proactive tax work in some corporate tax departments, a majority of tax leaders surveyed say upgrading their department’s tax technology is still a relatively low priority at their company.

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2026 Corporate Tax Department Technology Report

The report surveyed 170 tax leaders from companies of all sizes to find out how corporate tax professionals are using technology, overcoming obstacles, and planning for the future.

A growing “frustration gap”

In general, the report found that while many companies (especially larger ones) are actively upgrading their tax department’s technological capabilities, there is a growing frustration gap between what tax professionals know they can accomplish with more robust technologies and what their current tools allow them to do.

Adding to this frustration is a growing discrepancy between the additional budget and resources tax departments hope to get each year and the harsher reality they often face. Indeed, even though tax leaders remain optimistic that their budgets and capabilities will expand and improve in the coming years, fewer than half of the respondents surveyed said their departments received a budget increase last year, and many saw budget cuts.

Further, the report shows that the prospect of incorporating ever more sophisticated forms of AI and AI-driven tools into tax workflows is also very much on the minds of tax professionals. Even though the actual usage of AI in corporate tax departments is still relatively low, the report reveals that tax professionals now expect AI become a central part of their workflow within one to two years, much faster than they did in last year’s report.

Indeed, as the report explains, this expectation of more imminent AI adoption represents a significant shift in attitude, because most corporate tax departments are rather circumspect about how, when, and why they incorporate new tech tools into their established routines.

If today’s technological capabilities continue to accelerate, companies that have been slow to invest in the infrastructure necessary to keep pace may soon find themselves struggling to catch up with their more tech-savvy counterparts, the report warns.

Moving toward more proactive work, albeit slowly

For companies that have invested in the technological infrastructure necessary to support advanced tax technologies, the payoff is becoming increasingly evident.

According to the report, about two-thirds (67%) of tax professionals surveyed said their company’s investment in technology had enabled a shift toward more proactive tax work within their departments. This shift is particularly noticeable at large corporations, at which, unsurprisingly, investment in tax technology has been more generous.

The 2026 Corporate Tax Department Technology Report also explores other aspects of corporate tax departments, including their hiring practices, tech training, purchasing strategies, what they see as the most popular tech tools for tax, and numerous other factors that affect how tax departments operate.

You can download

a full copy of the Thomson Reuters Institute’s here

Key highlights:

• • • Tax credit transferability survived intact— The OBBBA preserved Section 6418 transferability rules despite earlier proposals to sunset or repeal them.

    • AI-driven data center boom may revive renewable energy tax credits— With data centers projected to consume 12% of all US energy by 2028, large operators have strong incentives to advocate for preserving and expanding renewable tax credits to meet massive energy demands through solar, geothermal, and battery storage solutions.

    • 2026 market conditions favor buyers due to supply-demand imbalance—Increased supply of tax credits (particularly Section 45Z clean fuel production credits) combined with reduced buyer competition from provisions like Section 174 and bonus depreciation has created advantageous pricing.

At the start of the current Trump administration, green energy tax credits were expected to be slashed or disappear altogether. In reality, significant changes emerged instead of ceasing to exist. More specifically, the One Big Beautiful Bill Act (OBBBA), passed in July 2025, kept the transferability rules around green energy tax credits intact.

As a result, the market for these credits remains robust in 2026 and 2027, says , an energy tax authority and principal at accounting firm CliftonLarsonAllen (CLA). In addition, multiple credits still have runway, and near-term dynamics in 2026 may favor buyers.

OBBBA’s changes result in shifts in marketplace conditions

When the OBBBA bill passed, the specifics revealed a more optimistic picture than many understand. According to Hill, specific examples include:

• • Wind and solar projects — Developers that begin construction by July 4, 2026, still have a four-year window to complete their projects and still claim credits. Even projects that miss this construction deadline can qualify if they’re placed in service by December 31, 2027.
  • Clean fuel production credits — Clean fuel production credits, detailed in OBBBA’s Section 45Z, received an extended runway through 2029.
  • Tax credit transferability — The tax credit transferability aspect under Section 6418 remained whole, despite previous versions of the bill proposing either a sunset date or outright repeal of transferability. This fact provides a level of marketplace certainty that can act as critical liquidity for developers that typically lack the tax liability to use credits themselves.

In addition, the legislation altered the buyer and seller environment. Provisions including OBBBA’s Section 174 and bonus depreciation generated additional deductions for certain companies, and as a result, reduced those companies’ 2025 corporate tax liability. Simultaneously, Section 45Z clean fuel production tax credits came into force and created a supply-demand imbalance that favors buyers.

Overall, in the latter half of 2025, Hill describes the marketplace as favorable for buyers because of an increased supply of tax credits that were for sale previously with fewer buyers. Into 2026 and beyond, both developers and corporate buyers still have significant opportunities to participate in the tax credit marketplace, explains Hill.

AI-related data center demand may spur new proposals for renewables tax credits

The explosive proliferation of data centers because of the growing AI demand across the United States may become the unexpected champion for renewable energy tax credits. Hundreds of facilities are currently under construction, and the energy demand implications are staggering. In fact, the projects that by 2028, data centers will consume 12% of all US energy.

Renewable energy technologies are emerging as essential solutions to meet these demands. Solar power, as a tried-and-true technology, offers ideal supplementation for data center operations; and geothermal heating and cooling systems directly address the massive temperature control challenges these facilities face. Perhaps most significantly, battery storage is rapidly becoming standard operating procedure, with both grid-based and solar-array-tied battery systems providing critical backup power.

These developments carry substantial policy implications. In fact, large data center operators have incentives to become vocal advocates for preserving and expanding renewable tax credits, says , a leader in federal tax strategies at CLA. “We want our AI, we want our cloud-based services. To do that… we need massive data centers and massive computing demands,” DePrima explains. “And that in turn requires massive amounts of energy consumption, which renewables can certainly supplement.” This, in turn, creates the potential for a renewable energy tax credit “comeback” within two to three years, he adds.

Guidance for buyers and sellers

Looking ahead to 2026 and beyond, both buyers and sellers of renewable energy tax credits should recognize that significant opportunities remain despite regulatory changes. More specifically:

For buyers — Buyers should act now to capitalize on favorable market conditions. With increased credit supply and reduced buyer competition due to provisions like Section 174 and bonus depreciation, pricing has become more advantageous. Buyers of renewable energy tax credits should consider structuring 2026 transactions to directly offset estimated tax payments throughout the year, thereby improving cash flow by making payments to sellers rather than the IRS. Financial institutions remain particularly well-positioned as buyers, as many have explored tax credit carryback opportunities to increase their tax savings even further.

For sellers and developers — Renewable energy tax credits sellers and energy project developers can use tax-credit monetization as a critical component of project financing because the ability to convert credits into immediate cash proceeds is essential for paying down debt and funding new projects. Despite initial concerns, substantial opportunities remain with credits outlined in Sections 45Z, 45X, 48E, and 45Y which are transferable and viable through 2029 and beyond.

In either case, tax credit transferability under Section 6418 offers key opportunities in the marketplace. Whether buyers are looking to reduce their corporate tax burden while supporting clean energy goals, or developers are seeking to monetize renewable projects — tax credits offer incentives to move forward.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, or tax advice or opinion provided by CliftonLarsonAllen LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of nontax and other tax factors if any action is to be contemplated. The reader should contact his or her CliftonLarsonAllen LLP or other tax professional prior to taking any action based upon this information. CliftonLarsonAllen LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

You can find out more about renewable energy tax credits here

Key takeaways:

• • • Tax departments lack resources and confidence — More than half (58%) of tax departments are under-resourced, and 59% are not confident that they can upgrade their tax technology over the next two years.

    • Under-resourced departments incur more penalties — At least half of respondents from under-resourced tax departments say their departments incurred penalties over the past year, compared to only about one-third of those from properly resourced departments.

    • Making the shift to proactive planning and value creation — For many tax departments, the winning model blends in-house expertise, targeted external support, and a coherent tech/AI stack that allows teams to shift from tactical compliance to proactive planning and strategic value creation.

Under-resourced corporate tax departments spend more of their budget on external support compared to well-resourced teams — yet they’re more likely to incur penalties and less confident in forecasting, according to the Thomson Reuters Institute’s .

Given this, the problem isn’t a lack of spending — it’s the operating model. With respondents from 58% of tax departments saying they are under-resourced, 59% saying they lack the confidence needed to upgrade their existing tax technology over the next two years, and most spending more than half their time on reactive compliance work when they’d prefer to focus on strategic planning, clearly the gap between ambition and reality has never been wider.

The answer isn’t working harder or throwing more money at consultants, however. It’s building a hybrid ecosystem of people, platforms, and partners designed to shift capacity from firefighting to foresight.

The Groundhog Day problem

Every year feels the same: New tax legislation (such as the One Big Beautiful Bill Act or Pillar 2), new compliance burdens, new geopolitical uncertainty — coupled with the same old constraints. Too much work, not enough time, and technology that lags.

When deadlines hit, under-resourced teams rely on two blunt levers: overtime and reactive outsourcing. Internal staff end up working longer hours, and external providers plug the gaps at short notice. This model is breaking departments and it’s breaking down itself.

Under-resourced departments are significantly more likely to incur penalties, with 50% of respondents saying their under-resourced department had been penalized in the past year, compared to just 34% of respondents from well-resourced departments that say that, according to the report.

Further, under-resourced department respondents said they were less confident in their ability to forecast accurately, with just 26% saying their ability to forecast accurately was “very likely” compared to 43% of well-resourced department respondents. Ironically, under-resourced departments also spend more on external support as a percentage of budget (44%) compared to 37% for well-resourced departments. Clearly, spending more doesn’t solve structural problems — it often masks them.

Meanwhile, tax professionals report spending more than half their time on tactical or reactive work, even though they would prefer to spend up to two-thirds of their time on strategic analysis. Not surprisingly, when the team is locked into manual reconciliations and last-minute fixes, it’s nearly impossible to influence business decisions or shape strategy.

Why “all in-house” or “all outsourced” no longer works

When more work is moved onto the plates of the internal tax team, all in-house can often come to mean all heroics — talented people drowning in compliance volume with no time to use the analytical tools already on their desks. Conversely, all outsourced risks hollowing out the department’s institutional knowledge and weakening its seat at the table.

A hybrid model asks better questions: What kind of work is this, and where does it create the most leverage? These questions can be used to determine where and to whom work should go. For example, high-volume, rule-based, recurring tasks are prime candidates for automation, shared services, or managed services under strong tax oversight; while complex, judgment-heavy, strategically sensitive work should remain anchored in-house, with external advisors extending capacity and offering specialized insight.

Thus, the best model for a modern corporate tax department is a hybrid ecosystem — not a fixed organizations chart, but a deliberate blend of internal expertise, enabling technology, and external capability partners.

Four layers of the hybrid ecosystem

This hybrid ecosystem can be delineated into four layers, each bringing their own insight and value:

1. 1. 1. People and roles redesigned — High-performing tax functions invest in analyst and tax-tech roles that connect tax to enterprise resource planning (ERP) systems, data hubs, and analytics, thus freeing technical experts from manual data work. Senior professionals then become embedded advisors to finance, treasury, and the business, not just compliance reviewers.
      2. Processes segmented into “run” and “change” — The biggest barriers to strategic work are excessive volume, heavy compliance burdens, limited resources, and time pressure. Modern tax departments respond by explicitly segmenting work in which run the business processes are documented, standardized, and increasingly automated or pushed into shared or managed service models. Change the business work remains tightly linked to senior tax staff.
      3. Technology becomes the data spine — More than half of respondents say they expect above-normal increases in their tax technology budgets, and more than half say their main resourcing strategy is introducing more automation. The goal isn’t collecting point solutions; rather, it’s building a coherent data spine that includes ERP integration, tax-specific data models, consistent workflow tooling, and strategic platforms that flex as regulations shift.
      4. AI act as an accelerator — Two-thirds of tax departments aren’t yet using generative AI (GenAI), according to the report. And among the one-third that are, usage clusters around research, document summarization, drafting, and some analytical support. The next step up the AI chain is for departments to move from individual experiments to standardized, governed workflows that scan legislation, prepare first drafts of memos, or interrogate large data sets for anomalies.

What high-performing hybrid tax departments do next

Departments that feel well-resourced, allocate more time for their professionals to conduct proactive work, and invest deliberately in technology and skills are significantly more confident in their ability to forecast accurately, avoid penalties, and minimize tax liabilities, the report shows.

Indeed, these high-performing hybrid tax departments:

• • • invest ahead of crises in people, tech, and processes
    • treat external providers as capability partners, not emergency relief
    • actively protect time for strategic work by automating or outsourcing routine tasks
    • insist on a durable seat at the strategy table, not just one for compliance reporting
    • experiment with automation and AI in focused, repeatable use cases

It is worth noting that smaller companies (those under $50 million in annual revenue) and the largest one (those with more than $5 billion in revenue) are leading the way by securing leadership buy-in early and leveraging specialized external expertise rather than trying to build everything in-house. Midsize companies, by contrast, are more likely to rely on in-house teams to lead automation efforts and less likely to use third-party vendors — a cautious approach that risks having them fall too far behind to catch up.

The message: Design the ecosystem, don’t just work harder

For corporate tax professionals, the message may be harsh but hopeful: You cannot work your way out of structural constraints by effort alone. Rather, a well-designed hybrid ecosystem can turn those constraints into a catalyst that will allow the department to deliver more value to the business. In fact, the modern corporate tax department is hybrid by necessity; but the question is whether it’s hybrid by design — or just by accident.

You can learn more about the challenges facing modern corporate tax departments here

Key takeaways:

• • • Data is your foundation, not AI — Before investing in AI tools, corporate tax departments are finding they need to centralize and automate their data across multiple ERP systems because clean, accessible data often determines whether technology implementations succeed or create additional problems.

    • Compliance is becoming commoditized — Specialization creates differentiation, and tax firms are discovering they can no longer differentiate themselves through basic compliance work that technology can complete in seconds. That means that successful practices are going deep into emerging fields like crypto, providing strategic insights that generic practices can’t match.

    • Learning to tell the story behind the numbers — A valuable skill for in-house tax professionals is becoming data fluent enough to analyze outputs and communicate tax implications to non-tax stakeholders. This ability to translate complexity into actionable business advice can transform your tax department from a cost center into a strategic partner.

If you’re spending most of your week on manual data entry and routine compliance work, you’ve likely noticed the ground shifting beneath the tax, audit & accounting profession. The work that defines value in tax is changing and has been for a while, and now more and more tax professionals are grappling with what that means for their careers.

What’s becoming clear for both corporate tax departments and tax firms is that 2026 represents a pivotal year — not because of arbitrary deadlines, but because the gap between traditional approaches and emerging practices is widening.

The corporate tax department: From compliance factory to strategic engine

For those in corporate tax departments, strategic work is increasingly becoming non-optional. Supply chain decisions, tariff implications, global compliance complexity — these are landing on the desks of in-house tax team members as core responsibilities rather than occasional advisory projects.

What’s emerging in leading tax departments? Three patterns: intelligence, automation, and agility.

The data challenge comes first — Many departments are discovering that before implementing AI strategies or automation roadmaps, they need to address their data infrastructure. Data often lives across multiple enterprise resource planning (ERP) systems, requires manual transfers between systems, and needs hours of reconciliation before it’s usable.

This foundational issue frequently determines whether technology implementations succeed or fail. Data dictates what’s possible with any technology, especially AI. For most organizations, it remains a vulnerability despite being a critical component of modern tax departments.

Supply chain decisions, tariff implications, global compliance complexity — these are landing on the desks of in-house tax team members as core responsibilities rather than occasional advisory projects.

Getting data centralized, automated, and accessible — and ideally aligned with the broader corporate finance department — may not make for exciting presentations to leadership, but it’s often the difference between technology that transforms a department and technology that creates additional work.

Technology decisions benefit from intentionality — AI is being marketed as a universal solution, but experienced professionals are finding it works best when applied to clearly defined problems. Before purchasing another platform or piloting another tool, successful tax departments are asking what they’re actually trying to accomplish with the technology. Which processes should be automated first? Does AI make sense for this particular challenge?

Productive conversations with organizations’ IT departments, understanding current technology stack capabilities, and mapping problems before seeking solutions — these approaches tend to matter more than the sophistication of the acquired tools themselves.

Certain skills are becoming increasingly valuable — You don’t necessarily need to become a data scientist, but technological and AI fluency is proving to be an essential skill. Think of it as learning another language — you need enough of a command of it to communicate effectively and understand what you’re looking at.

The ability to analyze data outputs, spot patterns, and tell the story of what the data means is separating strategic tax professionals from those who are focused primarily on compliance. Being able to communicate tax information to non-tax professionals and then translate complex implications into actionable business advice will position you and your department as a strategic partner rather than a cost center.

As the complexity of tax regulations continues to expand, both globally and locally, many in-house tax departments are finding they need to automate routine work and leverage technology not just for compliance, but to predict outcomes and advise the business strategically.

The tax firm: When compliance becomes commoditized

For tax and accounting firms, the current tech-driven shift is particularly urgent. Compliance work is becoming more and more commoditized, and technology can now complete basic compliance in seconds. Indeed, some financial institutions are offering it for free to attract clients.

Tax professionals still spend roughly 60% of their time on manual, repetitive work, but this model is under pressure. Regulatory authorities are using technology to demand information faster, and clients expect more. Further, competition is intensifying from private equity-backed firms, mergers, and tech-enabled competitors who can deliver compliance work at significantly lower costs.

Several factors that weren’t present before — such as PE investment, consolidation, technology democratization, and more — are creating unprecedented competitive pressure and fundamentally changing what distinguishes one tax firm from another.

Automation is becoming table stakes — Successful tax firms are systematizing and automating compliance work and developing customer relationship management (CRM) strategies for managing client data. This isn’t about eliminating jobs; rather, it’s about eliminating tasks. As mentioned, regulatory authorities are already demanding information faster using their own technology, and firms are finding they need to keep pace.

Several factors that weren’t present before — such as PE investment, consolidation, technology democratization, and more — are creating unprecedented competitive pressure and fundamentally changing what distinguishes one tax firm from another.

Specialization is creating differentiation, and as a result, the general tax, audit & accounting practice model is facing challenges. Clients increasingly need professionals who know their industry deeply, understand their specific challenges, and can provide insights beyond generic compliance work.

This often means making choices about where to develop deep expertise. Which industries will you focus on? What emerging areas would be best in which to position yourself? And the growing complexity and expansion of tax regulations actually creates opportunities for professionals who can think strategically about emerging fields.

Cryptocurrency is one example. Cross-border commerce, specific regulatory niches, particular industry verticals — these are areas in which specialization can create meaningful differentiation for a firm.

The advisor relationship looks different — Providing value in the tax profession is shifting away from form completion and to analyzing client data and providing deep, insightful guidance. This requires a different kind of client relationship — one that goes deeper into their operations, understands their business intimately, and positions yourself as a partner in decision-making rather than a vendor handling annual filings.

Again, you don’t need to know how to code but being able to analyze client data points and translate them into strategic insights is proving increasingly valuable.

The bottom line: 2026 is a pivotal year

The tax profession — on both the corporate and the outside firm sides — appears to be splitting. Some professionals are automating routine work, developing deep expertise, and positioning themselves as strategic advisors. Others are continuing with manual work and hoping that technology can increasingly make them better and faster.

For many, 2026 is about specialization and using technology to enable it. Yet, it’s also about reflection: If you’re no longer firm or in-house function is no longer primarily a compliance machine, what distinguishes them when compliance becomes commoditized?

Further, the complexity of tax regulations is expanding, and this complexity creates demand for expertise. The professionals and firms that can navigate that complexity, provide genuine insights, and communicate clearly may find themselves more valuable than ever.

This shift is already underway. Many professionals are asking themselves whether they’re positioning themselves for where the profession is heading and how they can best offer their strategic expertise to create value for their clients or organizations.

You can download a full copy of the 2025 State of Tax Professionals Report from the Thomson Reuters Institute here

Key takeaways:

• • • Real-time oversight and strict compliance — Mexico’s SAT now requires digital platforms to provide real-time access to transaction data and withhold taxes at the source, with severe penalties, including service blocking, for non-compliance.

    • Major technological and operational demands — Platforms must invest in secure, scalable systems for data sharing, billing, and cybersecurity, and small businesses likely will face extra challenges adapting to these requirements.

    • New roles for legal and tax professionals — Lawyers and accountants will be essential in guiding businesses through compliance, privacy, and operational risks, as well as supporting technology integration and adapting to the demands of Mexico’s digital tax environment.

Mexico’s digital tax overhaul is more than a regulatory update — it’s a fundamental shift that will reshape how businesses in that country operate online. By granting the Tax Administration System (SAT) real-time access to platform data, the government aims to curb tax evasion and strengthen collection in the digital economy. This means platforms like Amazon, Uber, Netflix, TikTok, DiDi, and Mercado Libre must now share transaction details as they happen, which will mean unprecedented compliance, technology, and operational challenges for companies and professionals alike.

Platforms must also — 2.5% for income tax (ISR) and 8% for value added tax (IVA). If a seller does not give a tax ID number (RFC), the platform will keep up to 20% of the payment; and, if the platform does not comply, SAT can block the service in Mexico until the problem is fixed. That means users will not be able to access the platform until it follows the law.

The goal of all this is to make tax collection fair and stop fake invoices and false transactions. The law also adds ; now, selling fake tax documents online can lead to two to nine years in prison.

These new tax measures also raise questions about with the United State-Mexico-Canada Agreement (USMCA or T-MEC), because some proposals — such as increased data access and stricter penalties for digital platforms — could conflict with the treaty’s provisions on cross-border data flows and platform liability.

Indeed, this shift is part of a wider digital transformation in Mexico, as seen not only with the new biometric CURP for identity verification, but also with SAT’s adoption of AI-driven smart auditing — both of which bring new opportunities and challenges for compliance, security, and public trust.

Technological impact on companies

These latest rules mean big changes for tech systems. Platforms must create secure connections for SAT to access their data, although they may use APIs or that send transaction details in real time.

Companies will need stronger cybersecurity policies because opening a permanent link to SAT creates risks, especially considering the high value of data that will be flowing through the system en masse. At a minimum, businesses will need to invest in heightened encryption to protect data, authentication systems to control access, and monitoring tools to detect unusual activity

Platforms also need to update their . Every sale must include correct tax retention and generate a digital invoice (CFDI). For larger platforms that process millions of transactions daily, this means building high-capacity systems to avoid delays or errors. These platforms will also need data pipelines to handle the huge volumes of information and, in turn, send that to SAT without slowing down the services of SAT or themselves.

Small companies and startups may face extra challenges. They might not have the money or staff to make these changes quickly; and they likely will require the assistance of technology providers or consultants to implement new solutions such as compliance-as-a-service and automated tax reporting software.

Challenges and opportunities for tax and legal professionals

For lawyers, these rule changes will create new work areas. Companies will need legal advice to comply with the new rules and protect user privacy. Lawyers, for example, can help draft policies, negotiate limits on data sharing, and design compliance programs.

There will also be litigation opportunities. Many that real-time accesses could violate privacy rights and even the Mexican Constitution, with legal challenges likely by companies as a result. However, due to the recent amendments to the Amparo Law, many of these lawsuits could be frustrated at the outset, because the new Amparo requirements demand the claim of direct and personal harm and impose stricter limits on judicial suspensions, making it harder for platforms to obtain effective protection against real-time monitoring.

For accountants and tax advisors, the challenge is operational. They must help businesses manage new tax retentions and keep accurate records. Many smaller businesses, especially in retail, will need help registering with SAT, issuing invoices, and recovering taxes withheld. Accountants will also need to plan for their clients’ as a result of the retentions potentially reducing liquidity.

Both professions are likely to see more demand for their respective services. Lawyers will focus on compliance and defense matters, while accountants will handle routine tax activities; however, both will be involved in technology integration. Professionals who combine legal or tax knowledge with these needed tech skills will have a big advantage.

Adapting to Mexico’s real-time tax landscape

Real-time tax monitoring is a major shift for Mexico’s digital economy, and it aims to increase tax collection and reduce fraud, but it also brings big risks and costs. And the success of this big fiscal change depends on balance. Authorities must ensure strong security and clear limits on data access, and they should also offer support to small businesses, either in educational or instructional fashion, to help those enterprises that may have fewer resources at their disposal to navigate this turbulence.

If implemented well, however, this system could make Mexico’s tax collection more efficient and fairer. If not, these changes could lead to privacy violations, higher costs, and even less participation in the digital economy by smaller entities.

Indeed, Mexico is entering new territory with these rule changes, and the world will be watching carefully as this could become a model for other countries’ digital tax compliance — or it could become a cautionary tale of what happens when technology and regulation collide without enough safeguards.

You can find out more about theĚýregulatory and legal issues impacting MexicoĚýhere

Key takeaways:

• • • Immediate R&D deductions — The One Big Beautiful Bill Act introduces Section 174A, which restores immediate deduction of domestic research and experimental expenditures starting in tax years beginning after December 31, 2024, reversing the controversial five-year amortization requirement that took effect in 2022.

    • Retroactive tax changes — Small business taxpayers with average annual gross receipts of $31 million or less (for tax years beginning in 2025) will generally be permitted to apply this change retroactively to taxable years beginning after December 31, 2021, offering significant opportunities for amended returns and potential refunds.

    • Planning considerations needed — The legislation modified Section 280C, which now requires that domestic R&E expenditures be reduced by the amount of research credit, creating new planning considerations for businesses claiming R&D tax credits alongside Section 174 deductions.

The Tax Cut and Jobs Act (TCJA), enacted in December 2017, brought significant changes to Section 174, impacting how businesses account for research and development (R&D) expenditures. With the passage of the One Big Beautiful Bill Act earlier this year, the landscape has shifted dramatically once again, requiring tax departments to engage in strategic planning and proactive tax management.

Section 174: From immediate expense to amortization

First enacted in 1954, Section 174 allowed for the deduction of expenditures related to R&D in the year the expense occurred. The TCJA eliminated the ability to deduct R&D costs as an expense in the year incurred, requiring costs to be amortized over five years for domestic research and 15 years for research outside of the United States.

Over the years, the IRS released guidance several times on how best to approach Section 174’s R&D capitalization. The most recent substantive guidance came in Notice 2023-63 (in September 2023), which provided interim guidance on the capitalization and amortization of specified research or experimental expenditures; and Notice 2024-12 (December 2023), which clarified the earlier guidance. Additionally, Revenue Procedure 2025-8 (December 17, 2024) provided updated procedural guidance for taxpayers filing automatic accounting method changes related to Section 174 expenditures.

Since the changes to Section 174 took effect in 2022, businesses have struggled to track R&D costs, including what should be excluded or included. This shift created cash flow challenges for innovation-driven industries, leading to widespread calls for reform.

The One Big Beautiful Bill Act: A game-changer for R&D expensing

The One Big Beautiful Bill Act (OB3) that was signed into law by President Trump on July 4th, brought sweeping changes to the tax treatment of domestic R&D expenditures. Under a new addendum, Section 174A, capitalization is no longer required for qualified domestic research activity for tax years beginning after December 31, 2024.

This represents a major victory for businesses that have been lobbying for relief from burdensome amortization requirements. For many businesses, this change will simplify tax compliance, improve cash flow, and reduce overall tax liability.

Importantly, amounts paid or incurred in connection with software development are treated as R&E expenditures eligible for immediate expensing, which can provide particular relief to technology companies and startups. However, research or experimental expenditures attributable to research conducted outside the United States must continue to be capitalized and amortized over 15 years, creating a bifurcated system that requires careful tracking of domestic R&D activities, compared to foreign activities.

The OB3 legislation also includes particularly generous provisions for small businesses. Small taxpayers — those defined by a gross receipts threshold established in Section 448(c) — can amend tax returns as far back as 2022 to reverse the capitalization of R&E expenses. The Section 448(c) threshold is adjusted annually for inflation; and currently, for tax years beginning in 2025, the threshold is $31 million in average annual gross receipts over the prior three tax years.

For all taxpayers that made domestic research or experimental expenditures after December 31, 2021, and before January 1, 2025, will be permitted to elect to accelerate the remaining deductions for such expenditures over a one-year or two-year period, providing flexibility in managing taxable income.

Planning for the new landscape

While the OB3 provides welcome relief, corporate tax professionals must remain vigilant and proactive. The legislation introduces new complexities, particularly around . The change mirrors the Section 280C rules that were in place prior to the enactment of TCJA in 2017, although taxpayers still have the option to make an election under Section 280C that would reduce their research credit by the maximum corporate tax rate (21%) in lieu of reducing their domestic R&E expenditures.

Here are other key considerations for corporate tax department leaders navigating the new Section 174A landscape:

Understanding qualified research — Tax departments must understand what is considered qualified research and development under the new rules. This involves staying current on all guidelines issued by tax authorities and working closely with the company’s R&D team. Critically, teams must now distinguish between domestic and foreign R&D activities, as the tax treatment differs significantly. This information should be communicated to upper management when considering product expansion or enhancements.

Documentation & recordkeeping — Concise documentation of any expense activity remains essential. Tax departments should capture now and decide later — because it’s better to have the data than not. For any R&D activity that takes place outside of the US, all data should be captured separately from domestic activities. Corporate tax departments should systemize documentation, collection, and storage of R&D expense-related information.

Amended return opportunities — Small businesses should immediately evaluate whether they qualify for retroactive relief and assess the potential benefits of amending their returns for the years 2022 through 2024. Even larger taxpayers should analyze whether electing to accelerate remaining unamortized amounts into 2025 or splitting them between 2025 and 2026 provides optimal tax outcomes.

Section 280C planning — Departments must carefully model the interaction between R&D tax credits and Section 174A deductions. The restored reduction requirement means businesses must evaluate whether making the Section 280C election to reduce the credit rather than taking the deduction would provide better overall tax results.

Scenario planning — Departments should develop multiple financial models based on different elections and timing strategies. This will help the company understand the range of impacts these changes will have on cash flow, net operating losses, and overall tax liability.

The OB3 represents a major course correction for R&D tax policy, but it requires tax professionals to adopt a proactive approach to maximize benefits. Corporate tax departments can navigate these changes effectively by staying informed about legislative developments, engaging in continuous learning, and leveraging advanced tax planning strategies. Also, collaboration with internal teams and external advisors will be crucial in identifying opportunities and mitigating risks.

Ultimately, establishing a proactive and nimble mindset will enable corporate tax professionals to optimize their positions and drive business success in this evolving regulatory landscape.

You can find more about how the One Big Beautiful Bill Act has impacted tax issues here

Key takeaways:

• • • Advocate for investment in technology and talent — As compliance and strategic demands grow, tax departments should use benchmark data from industry reports to build compelling business cases for automation, generative AI, and additional headcount.

    • Explore transferable tax credit opportunities — The transferable tax credit market has matured significantly, more departments should pursue these to offset tax liability, reduce estimated quarterly payments, and free up cash flow.

    • Proactively manage the OB3 transition — The One Big Beautiful Bill Act introduces substantial federal tax changes requiring strategic planning for 2026. Document analysis carefully as state conformity issues create future audit exposure.

The corporate tax landscape in 2025 is defined by resource constraints, regulatory complexity, and rapid technological change. And many corporate tax department leaders face mounting pressures from compliance demands, talent shortages, and evolving legislation — all while being asked to deliver more strategic value to their organizations, according to the , published by the Thomson Reuters Institute and Tax Executives Institute.

Under-resourcing and strategic gaps persist

Perhaps the most striking finding from the 2025 report is that 58% of corporate tax department professionals said their departments are under-resourced — an increase from 51% who said that the previous year. This apparent deterioration in resourcing creates cascading risks for businesses. Departments facing resource constraints report higher rates of penalties and audits, with 44% of survey respondents saying their under-resourced department experiencing penalties in the past year and 12% saying it had faced penalties exceeding $1 million.

The good news is that more departments are planning to hire rather than rely on overtime from existing staff, the report shows. However, the talent pool remains tight, making recruitment challenging. For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.

For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.

The report also showed that corporate tax departments continue to struggle with an imbalance between strategic and tactical work, with in-house tax professionals noting that they spend the majority of their time on reactive, tactical tasks while ideally wanting to reduce this to approximately 30% to 38% of their time.

What’s holding teams back? Excessive workload volume tops the list, they said, followed by complex compliance requirements, limited resources, and outdated technology. While two-thirds of respondents said their departments are still in the chaotic reactive stage of technology maturity, more than half said they expect higher-than-normal budget increases for investment in tax technology in the coming year, with many beginning to incorporate generative AI (GenAI) into their workflows.

Opportunities to create value exist

While these challenges exist, there are ways that corporate tax departments can identify and pursue value in the coming year. For example, the passage of the One Big Beautiful Bill Act (OB3) in mid-2025 introduced substantial changes to federal tax provisions including the ability to immediately expense research and experimentation costs under Section 174, reintroduction of full bonus depreciation, and liberalized interest deduction limitations.

The new Section 904(b) rules significantly improve the foreign tax credit mechanism by eliminating the allocation of interest expense and research and experimental (R&E) expenses to foreign source income, potentially lowering effective tax rates from 18.9% to approximately 14% at the aggregate level.

Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments.

However, OB3’s retroactive application to tax year 2025 creates immediate compliance complexity. State conformity issues compound the challenge, as many states have not yet updated their codes, creating potential mismatches between federal and state taxable income calculations.

Further, the transferable tax credit market has matured significantly, with nearly 25% of Fortune 1000 companies now participating, which is a 60% increase over 2024. Current market conditions favor buyers, with investment tax credits and production tax credits trading at discounts of 89-cent to 91-cents on the dollar.

These credits can offset tax liability, reduce estimated quarterly payments, and free up corporate cash flow. Tax departments should explore this opportunity as another tool for creating measurable value for the business.

Planning for 2026 and beyond

Despite the challenges facing corporate tax departments in 2025, success stories abound. Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments. The key is making the case for investment, staying ahead of regulatory changes, and continuously communicating your added value back to the business.

You can downloadĚýa full copy of theĚý, from the Thomson Reuters Institute and Tax Executives Institute, here