Generative synthetic intelligence (GenAI) has dominated enterprise headlines for the previous two years, promising to revolutionize all the pieces from customer support to monetary evaluation. But on the subject of company tax departments, a placing hole exists between the hype and actuality.

Based on the Thomson Reuters Institute’s 2025 State of the Company Tax Division report , two-thirds (67%) of tax departments aren’t utilizing GenAI, not less than not but. On the identical time, amongst departments implementing new applied sciences, 57% say their plans embrace GenAI. This paradox reveals each the cautious optimism and sensible challenges dealing with tax leaders.

Why tax departments are holding again

Most respondents (70%) say their firms are nonetheless navigating the leap from reactive to proactive levels of technological growth. Many departments are migrating from legacy techniques to centralized enterprise useful resource planning techniques —a large enterprise that consumes each funds and a focus.

This yr, 58% of survey respondents say their departments are under-resourced, a seven-percentage-point bounce from simply 51% final yr. When groups are stretched skinny managing compliance deadlines, discovering time to experiment with new know-how turns into practically unattainable. Tax professionals report spending greater than half their time on reactive work, largely round compliance.

When requested about their prime priorities for the subsequent 18 months, respondents rated digital transformation, synthetic intelligence (AI) implementation, and ERP techniques upgrades close to the underside. This means that many firms have already dedicated to technological transformation and at the moment are grappling with infrastructure rebuilding and workforce retraining.

What early AI adopters in tax departments are discovering

For the one-third of tax departments already utilizing GenAI, the know-how is delivering tangible advantages. Present utilization includes frequent duties corresponding to conducting analysis and helping with communication and collaboration. Tax professionals say they’re utilizing GenAI extra for proactive and strategic work than for each day tactical or reactive work, however not by a big margin.

Adoption of GenAI in company tax seems to be worldwide and multilingual. For multinational firms managing tax obligations throughout a number of jurisdictions, this provides vital benefits. Tax professionals would favor to spend about two-thirds of their work time on strategic and proactive evaluation. GenAI helps early adopters transfer nearer to this very best stability by automating time-consuming duties.

The accessibility benefit

GenAI could also be one of many first groundbreaking applied sciences to evolve that’s accessible to virtually everybody with out the necessity for vital financial funding. This creates a singular alternative for smaller firms with restricted budgets.

The best share of respondents reporting that their firms are on the proactive stage of their technological growth are these from smaller firms (these with lower than $50 million in income) at 25% and from the most important firms (these with greater than $5 billion in income), at 27%. These smaller firms are extra seemingly than all however their largest counterparts to get buy-in from senior administration for know-how purchases and to work with third-party distributors to assist automate their tax processes.

The boldness hole and useful resource connection

The info exhibits a transparent connection between assets, know-how adoption, and departmental confidence. Solely 26% of respondents from under-resourced tax departments say it is rather seemingly that they might present well timed and correct forecasting for the enterprise, whereas 43% of respondents from departments seen as sufficiently resourced say they might.

Solely about one-quarter (24%) of respondents who say their division is under-resourced say they’re very prone to keep away from incurring penalties within the coming yr, whereas 37% of respondents from adequately resourced departments say they’re assured they might keep away from penalties.

The info additionally exhibits tangible advantages of shifting towards proactive work. Solely 31% of respondents who devoted greater than half of their time to proactive work say their departments incurred penalties, whereas 56% of respondents who spend greater than half their time in reactive mode say their departments confronted penalties.

Wanting past GenAI in tax departments

Of these respondents at departments which can be implementing new applied sciences, 57% say their new know-how would come with GenAI, and 36% referenced machine studying. Apparently, 17% say their division plans to discover extra superior AI-driven applied sciences corresponding to agentic AI—techniques that may take autonomous actions to realize particular objectives.

Price range realities

Greater than half (52%) of survey respondents say their in-house tax departments count on not less than some further funds to put money into new know-how instruments and capabilities over the subsequent couple of years. In most departments, lower than 20% of a tax division’s whole funds is spent on tax applied sciences and software program, with the typical spend being about 15.4%.

Roughly half of respondents say their tax departments are actively planning to introduce new know-how or automation into their workflows quickly, particularly applied sciences which can be supported by machine studying and GenAI.

Worldwide adoption patterns

Tax departments in firms positioned exterior the USA are greater than twice as prone to be working on the highest ranges (optimized and predictive) of the know-how adoption scale as these inside the U.S. The European Union’s aggressive push to digitize all types of company taxation has prompted firms working there to undertake digital tax applied sciences a lot quicker.

The trail ahead for company tax departments

With 38% of respondents saying their tax departments intend to rent extra certified tax professionals over the subsequent yr or two (up from 32% in 2024), and with certified tax expertise remaining briefly provide, know-how turns into an much more crucial lever for efficiency. Nonetheless, 59% say they lack confidence of their division’s capability to sufficiently improve their tax know-how and automation over the subsequent two years.

Over time, the true worth of GenAI will probably be measured in time saved on repetitive, time-consuming duties, permitting customers to have extra time and a focus for extra complicated actions that require human judgment and experience. Company tax professionals are presently experimenting with the know-how to search out out the place it will probably assist them and the place it will probably’t.

The query for tax leaders is whether or not they’ll be among the many early adopters who form how GenAI transforms their operate—or among the many latecomers struggling to catch up.

Able to discover how your tax division compares? Obtain the entire 2025 State of the Company Tax Division report back to entry detailed benchmarking knowledge on know-how adoption, staffing methods, and useful resource allocation throughout 288 tax departments worldwide.