71.5% of Tax Software is Still On-Premise: What Does This Mean for CPAs?

According to AICPA’s 2025 Tax Software Survey, 71.5% of practitioners who prepare tax returns still run their tax preparation software from their own hard drive or local network, not in the cloud. 

On-premise systems remain deeply ingrained in the CPA world. This reality carries important implications for efficiency, flexibility, security, and the future of tax practice. 

What does this mean for CPAs?

If you are a CPA, should you be moving to the cloud? 

This blog will review key survey results and what they mean for the CPA industry as a whole.

Why CPAs Are Clinging to On-Premise Systems

Given the Software-as-a-Service (SaaS) and hosted options, why do the statistics indicate that a majority of CPAs are clinging to on-premise systems versus migrating to the cloud? It’s a deeply rooted question. Let’s review. 

Cost and Control

One reason many firms remain reluctant to adopt cloud-based tax software is the cost. According to the survey, price was the top complaint, with an average of 61.5% of users across major tax platforms stating they pay “too much.” For firms that have already made large capital investments in local infrastructure (servers, networks, backups), sticking with on-premise software may feel more financially justifiable than migrating.

Additionally, on-premise systems offer CPAs tight control over data, updates, and performance. Some CPAs may believe that local hosting provides better reliability, particularly during peak tax season, without worrying about latency or vendor-side outages.

The Risks and Trade-Offs of Staying On-Premise

If it’s supposedly cheaper, safer, and easier, why move to the cloud? As it turns out, there is another angle to consider in this equation (enter IT experts). There is a reason so many industries are moving operations to the cloud, and the advantages for CPA firms to follow suit are no different. 

Limits on Scalability and Remote Work 

By relying on local installations, firms may miss out on the flexibility and scalability that cloud-native systems provide. Remote access, collaboration, and scalability are more challenging when software sits on a local server.

The survey’s finding that only a minority of users are on vendor-hosted/cloud servers suggests that many firms are not fully leveraging cloud capabilities. This can hamper growth or make remote/team workflows more cumbersome.

Support and Training Challenges

Another revealing statistic: nearly 60% of users across major tax software do not receive training from their provider. Without ongoing training, CPAs working on-premises may struggle to adopt newer features or to pivot to cloud-based options later. Moreover, while 75.6% of respondents indicated that they needed technical support, the average rating for ease of getting help and the quality of support was 3.8 out of 5, suggesting room for improvement. 

What This Means for the CPA Industry

If so many firms are sticking with on-premise solutions, should your firm consider moving to the cloud? Here are key considerations to evaluate when transitioning within your firm.

Risk of Falling Behind on Innovation

The slow adoption of cloud-based tax software could put CPAs at a disadvantage. As tax work becomes increasingly more complex and staffing challenges snowball, firms that remain on-premises risk falling behind in speed, collaboration, and modernization. Additionally, as more advisory and planning work shifts to real-time, data-driven models, the limitations of local networks may become more apparent.

Pressure on Vendor Models

Tax software vendors may face mounting pressure to modernize their offerings. With a large share of their customer base still using on-premise solutions, vendors must support legacy local deployments and innovate for the cloud. The survey’s results hint at a split: some users, like those of CCH Axcess Tax, are already adopting cloud-hosted versions, but many remain entrenched locally. Vendors will have to balance maintaining backward compatibility with building cloud-first, scalable platforms.

Talent Recruitment and Retention

In an era where younger accountants are digital natives, relying on outdated, locally installed software might make it difficult for firms to attract talent. Cloud-based tools often offer better remote access, integration capabilities, and modern interfaces. These are things that matter to new professionals and help in the recruitment of top up and comers. If firms don’t evolve, they risk losing out on top talent or hindering efficiency.

PK Tech’s Recommendation for CPAs

If you’re looking to make the shift to cloud-based solutions, where do you start? 

If your goal is modernization, Microsoft Azure public cloud is your best bet because you can migrate your traditional on-premise applications to Azure, and you get the benefits of it being “your” cloud. Essentially, you can modernize your software into something in the cloud (this is exactly what we help our clients do at PK Tech) and customize the environment to your needs.

Note: If you use CCH ATX software, this does not apply to you. ATX does NOT support modern technologies, such as virtualization and terminal services. 

Strategic Moves for CPAs Considering Change

1. Assess Total Cost of Ownership (TCO): Firms should compare not just subscription costs but also infrastructure, maintenance, backup, risks, and management costs for on-premise servers vs. cloud.
   
   Also consider:
   1. How reliable is your building's internet and power? If it's down, your firm's down. When people remote into your office to work, how's your upload speed? Most business internet is cable-based and asymmetric, meaning the download speed is significantly faster than the upload speed. More expensive internet plans are typically required for CPAs, as they often involve hosting servers (along with monthly fees for additional static IP addresses).
   2. How resilient is your recovery plan? We've seen downtime causing events because the servers were on-premises. Real examples include a water leak in the server room that drips directly onto the top of the server rack, AC failure resulting in heat-damaged equipment, brownouts or power surges that fry power supplies and UPSs, and theft of equipment. Additionally, events such as planned power outages from the power company and office moves are significant downtime events.
   3. How good is your cybersecurity vs. the world? A typical setup for CPA firms hosting servers locally involves implementing Remote Desktop Services for remote access. The most common configuration is opening up a port on your firewall to the world so people can remotely access it. A port is an entry point into your network controlled by your firewall for a specific service, such as remote access. Typically, you have zero ports open and drop/ignore all attempts at port probing.
      
      If you have a port open (even an encrypted one, such as 443), any unpatched exploit or misconfiguration puts you at great risk of being compromised. Did you know hackers probe for open ports on every IP address in the world over 6000 times a day?
      
      There are ways to do this securely, but you're upping your investments in security and IT management to stay on-premise. There's a reason why so many people outsource hosting to Microsoft Azure: they support over 145 million daily active users and invest over $1 billion a year in cybersecurity.
      
      Finally, your cyber insurance questionnaire asks (or will ask soon) if you host internally and remotely access those servers, as it's a risk multiplier and a common factor in cyber claims.
2. Pilot Cloud Options: Start with a hybrid model. Run some engagements in a cloud or hosted setup (especially during busy seasons) to understand the trade-offs.
3. Invest in Training: With 60% of users not receiving vendor training, firms should proactively budget for training to ensure they can leverage the full feature set of any software.
4. Plan for Migration: Even if full migration isn’t feasible next year, develop a roadmap. Establish clear milestones: start with vendor-hosted options, then consider full cloud-native systems as confidence and resources grow.

What’s Next for the CPA Industry and the Cloud?

AICPAs survey findings highlight an industry tethered to legacy infrastructure: 71.5% of surveyed CPAs continue to run their tax software on-premise.

While this conservatism yields benefits in control and sunk cost usage, it also poses risks: slower innovation, limited remote scaling, greater risk, and challenges in talent management. 

As cloud technology continues to mature, forward-looking firms will need to weigh the short-term comfort of on-premise tools against the long-term agility and growth potential of cloud adoption. At PK Tech, we’ve done most of the heavy lifting for you: with customizable solutions within Microsoft Azure, we can help your firm migrate to the Cloud and position yourselves securely and effectively.

Ready to connect with PK Tech to migrate your CPA firm to the Cloud?

We’re proud to offer 15 years of experience with a focus on CPA firms. We boast AICPAs SOC 2 Type II attestation, proving via third-party audit by an independent CPA firm that we passed a rigorous and comprehensive assessment of our security and privacy controls. Schedule a time to chat with our team here.