CPA Firms in 2026: New Licensure Paths, Outside Capital and the Advisory Shift

For most of the last decade, the story of the small CPA firm was a story about scarcity: not enough new accountants, too many retiring partners, and a tax season that kept getting longer for the people left to do the work.

That story is changing, but not in a straight line. Licensing rules have been rewritten, enrollment is climbing, outside investors are buying firms at a fast clip, and AI has become the issue owners expect to matter most. Here is what is shifting and how small and mid-sized firms are responding.

The pipeline is reopening, slowly

The biggest structural change is to licensure itself. In July 2025, NASBA and the AICPA issued the ninth edition of the Uniform Accountancy Act, which added model language for a "bachelor's plus two" pathway: a bachelor's degree, two years of professional experience and a passing CPA exam score, without the extra 30 credit hours the 150-hour rule required. The update also bases a CPA's ability to practice across state lines on their individual qualifications rather than on whether two states' rules are "substantially equivalent."

States moved quickly. By mid-2026, trade coverage counted more than 40 states and territories that had adopted an alternative pathway, with only a handful still working on legislation. In many states the traditional 150-hour route remains available alongside the new one.

The student pipeline is responding too. Undergraduate accounting enrollment rose 7.3% in fall 2025, the third straight year of growth, according to National Student Clearinghouse data cited by the AICPA. Accounting grew far faster than the 1.2% increase across all majors.

That is the encouraging half. The other half is that today's graduates were recruited years ago. Schools awarded 55,152 accounting bachelor's and master's degrees in the 2023–2024 academic year, down 6.6% from the year before. New CPA exam candidates fell from 42,626 in 2023 to 28,082 in 2024, a drop the AICPA's Trends report tied to major exam changes, before showing signs of a rebound in 2025.

Demand is not waiting. The Bureau of Labor Statistics projects employment of accountants and auditors to grow 5% from 2025 to 2035, with about 115,300 openings a year, many of them created by people retiring or leaving the field.

What firms are doing about it

The firms handling this best treat the new pathway as a recruiting tool rather than a technicality. With experience carrying more weight on the new path, a firm that offers well-supervised, well-documented experience is offering candidates something tangible. Others are widening the hiring net to career changers and non-CPA staff for preparation and bookkeeping roles, and reserving licensed time for review and client conversations.

Tax season is getting more complex, not less

Ask small-firm owners what keeps them up at night, and complexity tops the list. In the AICPA Private Companies Practice Section's 2026 Top Issues survey, managing tax law complexity ranked first for both sole practitioners and firms with two to ten professionals. IRS challenges made the top five for smaller firms and for firms with 11 to 30 professionals, where hiring experienced staff ranked first and managing workload and capacity ranked third.

The legislative calendar is not helping. The sweeping federal tax law signed in July 2025 (Public Law 119-21) phases in changes over several years, including a new charitable deduction for non-itemizers and an expanded child and dependent care credit starting with tax year 2026, plus a new scholarship credit beginning in 2027. Every provision with a start date is another round of client questions.

How firms are protecting their people

Burnout comes from the gap between the volume of work and the hours, skills and review capacity available. Firms narrowing that gap tend to do a few unglamorous things well:

Set and enforce document deadlines, with a clear message that late documents mean an extension.
Prune the client list, raising prices or parting ways with clients whose fees do not cover the effort.
Move work off the peak, through planning engagements, estimated-tax reviews and monthly services that fill the calendar outside March and April.
Track capacity honestly, so partners know before January, not in March, whether the team can absorb the load.

Advisory work keeps pulling ahead

The shift from compliance to advisory has been discussed for years, and the numbers continue to back it up. In the most recent Client Advisory Services benchmark survey from the AICPA's PCPS and its technology affiliate, firms reported 17% median CAS revenue growth for 2023 over 2022 and projected a median of 99% growth over the following three years. For comparison, a separate national survey showed a 9.1% median increase in overall firm net client fees for 2022 over 2021. A 2026 edition of the benchmark survey is underway.

Pricing changed along with the work. Only 10% of CAS practices in that survey still primarily billed by the hour, down from 53% in 2018. The rest have moved away from the hourly model.

For a small firm, the appeal is not only margin. Recurring advisory work spreads revenue and effort across the year, and clients who rely on their accountant every month are less likely to shop on price each spring. The trade-off is that advisory work needs real-time client data and regular communication, which pushes firms to rethink how they collect information and stay in touch.

Private equity has changed the exit math

Outside capital is the trend no owner can ignore. One analysis in New Jersey CPA magazine counted more than 53 notable private equity transactions involving U.S. accounting firms between 2020 and mid-2025, bringing in roughly $29 billion. In 2020, none of the 30 largest U.S. firms had outside private capital; by late 2025, analysts expected more than half to have some form of PE investment or strategic partnership.

The effect reaches well below the top tier. Research released in March 2026 by the International Federation of Accountants found that 177 direct PE investments worldwide led to 875 follow-on "roll-up" acquisitions between 2015 and 2025, and that most of those roll-ups involved smaller firms. In 2025, each direct investment led to about 7.6 additional transactions, a ratio that has quadrupled since 2021.

The drivers are familiar: partners nearing retirement with no internal buyer, rising technology costs and a hard hiring market. PE offers liquidity and capital. Critics, and professional bodies including IFAC, have raised questions about independence, audit quality and whether short-term return targets fit a profession built on public trust.

For owners, the real questions are what happens to staff, clients and culture after a sale, and whether staying independent means funding technology and people on their own. There is no universal right answer. But firms that stay independent increasingly do so on purpose, with a succession plan, a technology budget and a clear specialty, rather than by default.

AI is now the long-term issue

In the 2026 PCPS survey, managing change driven by technology and AI ranked first for expected five-year impact across every firm-size group, from sole practitioners to firms with more than 500 professionals. Even so, Lisa Simpson, the AICPA's vice president of firm services, noted that "accounting is still a people business."

That balance is how many small firms are approaching AI: as a way to take routine drafting, summarizing and data entry off skilled people's plates, while keeping professional judgment and review firmly human. The practical work is less about picking tools and more about governance: deciding what client data may go where, who reviews AI-assisted output, and how the firm documents both.

Clients expect digital service, and regulators expect it to be secure

Clients now expect to upload documents from a phone, sign electronically and get answers without a week of phone tag. Those expectations meet real obligations. In July 2026, the IRS Office of Professional Responsibility reminded practitioners that firms in the business of preparing tax returns are financial institutions under the FTC's Safeguards Rule, which requires a written information security program. The IRS also notes that Circular 230's competence standard has been read to include technological competence, and it publishes a sample written security plan (Publication 5708) aimed largely at smaller practices.

In practice, that makes email attachments and shared folders a liability. Firms modernizing their client experience are finding that a secure portal, multi-factor sign-in and clear document retention rules serve both goals at once: easier for clients and easier to defend.

Practical takeaways

Make supervised experience a recruiting advantage under the new pathway.
Protect capacity with deadlines, pricing and client selection before the season starts.
Grow recurring advisory work to smooth the calendar.
Decide your ownership strategy before an offer arrives.
Write down your AI and data-security rules, and keep your security plan current.

Where we fit

Yotta Design builds software and websites for accounting practices, and our FirmPortalHQ solution brings a client portal, website and practice software together for CPA and tax firms. If some of the trends above are on your list for the coming year, you can see how we work with CPA firms.

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