Preliminary results from the EY 2024 Tax Accounting and Risk Advisory Services1 (TARAS) survey have shed light on several trends that are shaping the landscape of the accounting for income taxes. As organizations navigate the complexities of a changing tax legislative landscape and strive for operational efficiency, the survey highlights key opportunities for tax provision teams. Below are the prominent tax provision trends identified in the survey and how your organization can be better prepared in 2025.
1. Explore AI and automation
Artificial intelligence (AI) is increasingly being recognized as a transformative tool in tax reporting. The survey indicates that many organizations are actively considering the integration of AI into their tax processes. Survey respondents are using and exploring AI for key tax provision processes, including transactional data reviews and tax account reconciliations, in addition to streamlining administrative tasks, such as drafting memos. AI has the potential to streamline tax provisions by automating routine tasks, enhancing accuracy and providing deeper insights through advanced data analytics. In 2025, organizations that successfully implement AI should see significant improvements in efficiency and decision-making, reducing the burden on staff and allowing tax professionals to focus on more strategic activities.
Additionally, for the second consecutive year, increased automation and identifying efficiencies to shorten close cycles remain top priorities for organizations. More than 50% of respondents indicated that quarterly and year-end closes are the most labor-intensive periods. The drive toward automation aims to alleviate the manual workload, reduce errors and expedite the closing process. Organizations that invest in automation technologies will likely achieve faster close cycles, improve accuracy and create a more agile tax function, enabling them to respond swiftly to regulatory changes and business needs.
2. Review allocation of staff time
Actual time spent on provision preparation continues to be an area where improvement is needed. The survey reveals that not enough time is being allocated for reviewing provisions, while too much time is spent supporting calculations. This imbalance can lead to errors and missed opportunities for optimization. In 2025, organizations must prioritize the reallocation of time toward more value-added activities, such as thorough reviews and strategic planning, to enhance the overall quality and accuracy of tax provisions.
