Executive Summary

This report distills how Artificial Intelligence (AI) is reshaping US tax and accounting software, what this means for operational efficiency, and where capital is flowing.

A breakdown of the market forces accelerating adoption, including professional shortages and surging microbusiness formation.

• An overview of the venture capital landscape, highlighting more than 60 funded startups and over $1.2B invested across the Bay Area and beyond.

• Detailed analysis of technology models (from OCR to Agentic AI (advanced AI that can plan, decide, and take actions across multi-step workflows with minimal human intervention)), their use cases in finance teams, and emerging business models such as co-pilots and hybrid AI + service platforms.

• A full scan of notable startups by model and funding stage, plus insights into vertical-specific tools for niche segments like therapists, ecommerce, and logistics.

• Competitive strategy profiles of incumbents like Intuit and Deloitte, and their shift toward GenAI integration.

• A summary of adoption barriers—technical, regulatory, and cultural—and their implications.

• Forward-looking commentary on the rise of embedded compliance tools, vertical SaaS platforms, and AI-powered human-led firms as future acquisition targets.

Industry Snapshot

• Generative AI Adoption in Tax Departments

  • 8% of U.S. tax departments are already using Generative AI.

  • An additional 13% plan to deploy it soon.

  • Time savings: 4–12 hours per week (Thomson Reuters).

• Market Size & Growth

  • AI in accounting and tax projected at $6.6 billion by 2025.

  • Annual growth rate: 40%+ CAGR.

• Startup & Funding Landscape

  • 60+ startups in AI accounting/tax funded since 2023.

  • $1.2B+ raised by Bay Area-based firms alone, representing 30%+ of all deals.

• U.S. Entrepreneurship Surge

  • 5M+ new business applications per year since 2020 (U.S. Census Bureau).

• Accounting Talent Shortage

  • 300,000+ accountants have exited the profession since 2020 (WSJ).

1.Introduction: AI as a Catalyst in Tax and Accounting

The tax and accounting software landscape is at a pivotal moment, driven by the transformative power of Artificial Intelligence (AI). Several converging factors are accelerating this shift: the increasing complexity of tax codes, a persistent and growing shortage of qualified accounting professionals, and rising demand for greater efficiency, automation, and personalized financial insights from both businesses and individuals.

AI, encompassing machine learning (ML) and generative AI (GenAI), is emerging as a key enabler to address these pressures. Its applications extend beyond basic automation of data entry and calculations to encompass complex research, compliance monitoring, predictive analytics, and augmenting advisory services. This potential has attracted significant attention and capital, positioning AI as a central force reshaping the future of tax and accounting technology.

2. Market Drivers and Buyer Priorities

Since 2020, the US has experienced an unprecedented surge in entrepreneurship, with more than 5 million new business applications filed annually according to the US Census Bureau. Many of these new businesses are lean and lack full time finance teams, leading to a massive increase in demand for scalable, automated accounting tools. At the same time, the accounting profession is experiencing a talent shortage. According to the Wall Street Journal, more than 300,000 accountants and auditors have left the industry since 2020, either retiring or changing careers, leaving firms scambling to fill roles and meet deadlines.

These converging forces have created a perfect storm that is accelerating AI adoption in the industry. Buyers, particularly small and mid-sized business owners, CFO’s and internal finance teams are now actively looking for software that doesn’t just automate transactions but augment decision-making. Enterprises, which traditionally lag behind in technology adoption, are beginning to experiment with copilots and financial AI assistants that reduce dependency on overextended teams.

This demand shift is also changing the way software is sold. Buyers today expect rapid onboarding, modern user interfaces, integrations into existing software stack and clear return on investment. Most importantly, they are seeking tools that don’t just replace existing workflows, they want software that fundamentally rewrites them.

Startup Landscape and Venture Investments

As adoption of accounting and tax tools are accelerating, the venture capital landscape is backing the market shift with investments. Between 2023 and 2025, over 60 AI-focused accounting and tax startups have raised institutional capital. According to PitchBook and Crunchbase data, more than 30% of these are headquartered in the San Francisco Bay Area, collectively raising over $1.2 billion in funding. This includes major rounds such as: Finally raising over $300 million for AI assisted bookkeping and cashflow insights, FloQast’s compliance and accounting platform for CFO’s raising $100 million, Pilot raising over $220 million for its AI + service hybrid bookkeping model, Digits with almost $100 million in capital developing fully automated accounting solution for smaller businesses.

Some of the most active early stage funds in the space are Bessemer Venture Partners, Menlo Ventures, Founders Fund, 8VC, Benchmark, Redpoint Ventures, Polaris Partners and Campfire. There is growing interest from corporate venture capital into this area as well with KPMG Ventures, Thomson Reuters Ventures, Sapphire Ventures, and Dell Technology Capital being the most active.

Top 10 Artificial Intelligence Accounting & Tax Startups

• Finally ($305M total funding)
  End-to-end AI financial platform for small businesses, combining bookkeeping, payroll, cards, and expense automation. Uses AI to eliminate manual data entry and streamline reconciliation. Designed for SMBs seeking a fully integrated, automated back office.

• FloQast ($292M total funding)
  Workflow automation and close management software for accounting teams. Augments human work with AI-driven matching, reconciliation assistance, and anomaly detection. Serves mid-market to enterprise companies.

• Digits ($97.5M total funding)
  A real-time AI accounting engine that sits on top of existing bank and accounting systems. Provides intelligent dashboards, dynamic reports, and transaction categorization. Tailored to startups and tech-forward small businesses.

• Vic.ai ($52M total funding)
  One of the earliest to introduce autonomous accounting. Uses AI to handle accounts payable—invoice ingestion, classification, approval, and posting—without templates or rules. Primarily targets mid-sized and enterprise finance teams.

• Basis ($37.6M total funding)
  A modern AI co-pilot for accounting firms. Automatically handles transaction ingestion, categorization, and reconciliation using large language models (LLMs) and custom logic layers trained on GL data. Built to integrate into firm workflows.

• Aiwyn ($127M total funding)
  Offers AI-enabled billing and collections automation for professional services firms. While not a pure bookkeeping tool, it complements accounting workflows by accelerating cash flow and reducing AR follow-up.

• Auditoria.AI ($60.5M total funding)
  Automates back-office finance functions—AP, AR, and procurement—using NLP and RPA-style AI. Designed for enterprise finance teams to reduce email-based workflows and manual tasks.

• Numeric ($38M total funding)
  Focuses on the financial close process. Uses AI to assist with variance detection, audit preparation, and task orchestration. Designed for in-house accounting teams at growth-stage companies.

• Zeni (~$47M total funding)
  Offers a fully managed AI-powered finance team for startups. Combines machine learning with human oversight to deliver bookkeeping, FP&A, and tax in a single dashboard. Ideal for VC-backed companies with recurring reporting needs.

• Truewind ($17M total funding)
  Built specifically for startups, Truewind uses generative AI to automate bookkeeping, categorize transactions, and produce investor-ready financials. Combines a human-in-the-loop approach with LLM-based workflows.

Other notable newcomers include Bluebook building AI agents for accounting firms, TripleZip automating accounting for commercial real estate, Finta with automated bookkeeping and tax filing technology, Truewind developing a fully digital staff accountant and Minerva AI building an automated accounting specialized for small businesses. You can download the full list of Top 50 Accounting & Tax AI Startups here.

These startups reflect the increasing segmentation of the market—by business size, operational complexity, and vertical specialization. The ecosystem is maturing rapidly, with players moving from early experiments to embedded mission-critical finance infrastructure.

• Accounts payable, receivable, and expense workflows,

• R&D and employment tax credit automation,

• Financial forecasting and internal control tools,

• Embedded tax filing within banking and payroll platforms.

4. Technology Models and Applications

Artificial Intelligence in accounting is getting built as a collection of complementary technologies that are improving how financial data is collected, sorted, processed, interpreted and acted upon. These technologies are enabling a new class of accounting tools that can complete tasks faster, reduce human error, and at a lower cost than traditional systems. While automation long existed in accounting software, AI is introducing intelligence with tools that can learn, adapt and improve over time, and can be trained with internal data.

Key technological foundations include:

• Optical Character Recognition Translates physical or scanned documents into structured digital data. Used to automate data entry for invoices, receipts, and statements.

• ML | Machine Learning (a method that enables systems to identify patterns and improve performance without being explicitly programmed): Identifies patterns in financial behavior, predicts cash flow anomalies, flags suspicious transactions, and recommends categorizations.

• RPA | Robotic Process Automation (software that mimics rule-based human tasks to automate processes like invoice matching or approvals): Mimics rule-based user actions—such as matching payments, routing approvals, or reconciling accounts.

• Generative AI (technology that creates text or content responses based on prompts, often used in research and drafting memos): Produces human-like text or analysis. Enables features such as audit memo writing, Q&A with tax code, and summarizing financial positions.

• Agentic AI: A newer evolution, agentic AI can plan, reason, and execute multi-step financial tasks with minimal human input. This includes reviewing ledgers, preparing summaries, or triaging workflow tasks.

Primary Use Cases in 2025

1. Bookkeeping Automation: Categorization, journal entries, and monthly closes are increasingly handled by tools like Digits, Pilot, and Decimal.

2. Tax Preparation and Filing: Companies like Black Ore and April automate compliance workflows, including 1040 and 1120 preparation.

3. Accounts Payable (AP) Automation: Platforms such as Vic.ai, Tipalti, and MakersHub extract invoice data, match POs, and trigger payments.

4. Audit and Risk Monitoring: Tools like Audit Sight and Field Guide analyze transactions and documentation to identify irregularities.

5. Financial Planning and Analysis (FP&A): Liveflow and Leapfin offer real-time dashboards, budgeting models, and variance analysis tools.

6. Tax Credit Optimization: Fondo, Neo Tax, and SPRX automatically identify eligible R&D activities and generate documentation.

7. Embedded Tax Tools: Startups like April integrate filing and tax estimation directly into banking or payroll platforms.

These tools are not simply automating tasks—they’re actively restructuring how work gets done. Instead of preparing data for analysis, finance professionals are increasingly starting with AI-generated insights, then refining, validating, or advising based on that foundation.

5. Incumbent Strategy and Competitive Response

The accounting software incumbents: Intuit, H&R Block, Thomson Reuters, and the Big Four consulting firms have begun to respond to AI’s acceleration, but their pace and depth of change vary.

Current Moves:

• Intuit has introduced Intuit Assist across QuickBooks and TurboTax, offering GenAI chat support, predictive modeling, and cashflow forecasting.

• H&R Block launched Tax Assist, integrating large language models to provide conversational tax advice and help users navigate filings.

• EY.ai and Deloitte Zora represent early efforts by global consultancies to create proprietary agentic AI platforms, designed to support enterprise-grade compliance and decision automation.

Key Constraints:

• Many incumbents are still heavily reliant on hourly billing or transactional pricing models, which are poorly aligned with AI-enabled service delivery.

• Their legacy software products are burdened by technical debt, slowing integration of new AI features.

• Product teams often work separately from services arms, leading to inconsistent user experiences and slower release cycles.

• User interfaces and onboarding flows lag behind AI-native startups, particularly in serving mid-market clients.

Strategic Shifts Underway:

• Movement from billable hours toward value-based pricing models.

• Exploration of bundling GenAI features into broader product suites.

• Acquisitions of AI startups (especially in tax credit, automation, and vertical SaaS) expected to accelerate as internal innovation stalls.

These firms are not standing still but they are no longer setting the pace. In most segments, AI-native startups are outpacing incumbents on speed, usability, and integration readiness. For traditional businesses evaluating platforms, it is increasingly important to assess not just brand reputation, but the depth of AI-native functionality and support.

6. Key Takeaways & Outlook

The insights presented in this report reflect our research and forward-looking opinions based on the current 2025 landscape. We expect continued evolution, and anticipate shifts in models, adoption, and partnerships as the technology matures.

• AI-powered vertical software (e.g., for logistics, real estate, therapy) expected to outpace general tools in small business markets.

• More consolidation and partnerships expected as AI accounting tools become infrastructure.

• 2025 adoption is accelerating across use cases and firm sizes.

• Future trends include AI + human hybrid firms, embedded compliance in vertical SaaS, and increased M&A across finance platforms.

• AI tools in accounting rely on five core technologies: Optical Character Recognition, Machine Learning, Robotic Process Automation, Generative AI, and Agentic AI.

• Use cases span bookkeeping, tax filing, AP, audit, FP&A, and credit optimization.

• Adoption is expanding from automation to decision support.

• Embedded tools are making AI invisible but ever-present across finance software.

References & Further Reading

• Thomson Reuters Institute Generative AI in Tax Firms Report

• Finance and Accounting Startups funded by YCombinator

• CPA Practice Advisor: Automation and Time-Savings Impact in Mid-Market Finance

• PitchBook: Private Capital Monitor – Accounting & Finance SaaS Deal Flow

• Crunchbase Pro: Company Profiles and Funding Histories

• U.S. Census Bureau: Business Formation Statistics

• Wall Street Journal: “As Regulations Change, Companies Grapple with Accountant Shortage”

• Bloomberg Tax: How is AI used in Tax and Accounting?

• Startup websites and founder interviews compiled by Ant VP research team (Q1–Q2 2025)