The accounting profession is nearly finished overhauling the educational requirements for CPA licensure, but the looming question remains: What happens next?
In a fast-spreading nationwide effort, the accounting profession has addressed the ongoing talent shortage by altering what many consider to be a major accessibility hurdle: the 150-credit-hour rule. As such, nearly all states have adopted additional pathways to licensure that allow would-be CPAs to substitute work experience for a costly and time-consuming fifth year of education. The remaining few jurisdictions that have not yet made changes are expected to by the end of 2027.
The effort, by and large, is considered a major achievement by state accounting societies and state accounting boards, as well as the American Institute of CPAs and the National Association of State Boards of Accountancy.
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"From this 50,000-foot level, it is a tremendous success for the profession in terms of creating access for candidates," James Cox, state legislative director at the AICPA, told Accounting Today. "It's a testament to the strength of state CPA societies that are at the forefront of this effort at the state level."
However, the profession has been in a similar position before when the standard used to be only a bachelor's degree and passing the CPA exam.
"A lot of what is old is also new in terms of accounting policy," Cox said. "From that policy perspective, it is predicated on what the market is telling us. The profession has consistently been willing to respond where the market is going."
The history of the 150-hour rule
In the 1980s, the AICPA and NASBA began advocating state by state for the 150-hour rule, which required CPA candidates to obtain 150 credit hours of education to apply for licensure. Moving from a bachelor's degree to a master's degree aimed to better prepare future CPAs for increasingly complex client needs and the evolving nature of accounting, and to boost the standing of the profession. It wasn't until the 2000s that the 150-hour rule would finally become the general standard.
Fast forward to the present — changing the requirements for CPA licensure took considerably less time. By all comparisons, the change was incredibly swift despite the profession's traditionally conservative nature.
"We're only a year and five months in, and this is almost nationwide adoption," said Laura Hay, president and CEO of the Ohio Society of CPAs. "I've never seen a regulatory change happen this quickly, so the pace and the alignment that the states have moved together as closely as we have have been the two surprises"
Ohio was the first state to pass legislation when its governor signed the bill on Jan. 8, 2025. The law, which became effective Jan. 1, 2026, created two new pathways: a bachelor's degree with an accounting concentration and two years of experience, or a master's degree with an accounting concentration and one year of experience. Both require passage of the CPA exam.
This change has been largely lauded as a success, but step back just a few years and some major stakeholders, specifically the AICPA and NASBA, were singing a different tune. Minnesota, the first state to actually propose a bill in 2023, bore the brunt of it.
"It was fast, furious, negative," recalled Geno Fragnito, director of government relations at the Minnesota Society of CPAs. "There was a lot of pushback, a lot of accusations — things like you're going to ruin the profession, or this is not workable because of mobility, and some other types of opposition. That lasted for a good six or seven months, probably, after we first introduced the bill."
Minnesota's law created two new pathways to CPA licensure: a bachelor's degree plus two years of experience, or a master's degree plus one year of experience. Both require passing the CPA exam. The new pathways went effective on Jan. 1, 2026, and it will sunset the 150-hour credit rule after June 30, 2030.
Years before even introducing the bill, Fragnito said the MNCPA was hearing that the 150-hour licensure requirement was impeding some people's willingness or ability to enter the profession. "It was a situation where it was every meeting, and it was not something we had an agenda to talk about. It came up organically," he said.
The OSCPA's Hay explained that the AICPA eventually "acknowledged themselves that perhaps the states were a bit closer to their constituents in hearing that there was no more time for studying or building workarounds, but that we needed to tackle this head on."
Now, 49 U.S. jurisdictions have submitted a bill, with six more to go. Thirty-nine have signed changes into law and 23 are already effective. The remaining jurisdictions are expected to propose and pass changes by the end of next year.
Pennsylvania is already beginning to see the results. The Keystone State was the first to begin licensing candidates based on the additional path, effective on June 30, 2025, immediately upon the governor's signature of the bill. The law creates another pathway to licensure, in addition to the 150-hour path, which requires 120 credit-hours, two years of experience and passing the CPA exam.
"We immediately saw a group of candidates change their plans, stop pursuing the extra 30 credits, get licensed on bachelor's, and try to get into the workforce sooner," according to Jen Cryder, CEO of the Pennsylvania Institute of CPAs.
Over the past 12 months, Pennsylvania has licensed a total of 734 new CPAs. Of those, approximately 350 were licensed through the new bachelor's degree pathway, meaning nearly 48% of all new licenses issued during that period came through the updated path.
First-time hurdles
There are a few first-time hurdles that experts expect will smooth out with time and are likely not representative of the future. Practice mobility, for instance, is a concern as states' bills go effective at different dates and as state boards of accountancy adopt new rules. However, along with the educational changes, most states passed provisions ensuring automatic mobility for out-of-state CPAs.
"It creates a level of concern amongst practitioners," the AICPA's Cox said. "But for the most part, we have not seen very many concerns. For the most part, those licensees that had mobility a year and a half ago still do."
"We are not finding any state that went rogue off in a different direction and came up with some crazy set of requirements," Cryder echoed. "Everybody moved together, so we'll see over time, but it looks like mobility is in great shape right now."
Then there's the constant question of what this means for the reputation of the CPA license and the accounting profession at large.
"It's too early to tell how it will impact hiring trends, audit quality, some of those longer-term indicators," Cryder said. "But at least in the short term, I think we've cast trust front and center, and I don't think anyone is questioning the level of rigor of becoming a CPA today with the new pathway."
Still, questions remain as to which pathway will shake out as the best and most competitive in practice.
"From the AICPA perspective, we would advocate for the strongest pathway to become a CPA," Cox said. "I think we would still advocate for the master's degree. It makes you a marketable candidate."
Then again, considering the ever-present labor shortage, perhaps it won't matter to firms. Changing licensure requirements was just one of many levers the profession needs to pull to attract more talent. Just scratching the surface, starting salaries need to increase and the profession must market itself better to free itself from the outdated stereotype of the drab beancounter.
Academia's challenge
Students and educators are perhaps feeling the worst of the growing pains.
"All of a sudden we found the bill was signed and effective and began to mobilize a really broad communication campaign," Cryder said. "I think that's the biggest challenge across the country — letting students know about the change and then helping support them as they make decisions."
Cryder described receiving phone calls from students asking if they really don't need the 150 credits anymore. She assured them they didn't.
In turn, colleges and universities are fighting to keep their curricula up to speed with the rapidly changing profession — and those changes aren't expected to slow down any time soon.
"I'm on red alert trying to figure out, 'Are we going to be in compliance? Do we need to get recertified for the 120-hour pathway?'" said Tracey Niemotko, department chair and professor of accounting at Marist University.
Niemotko emphasized that making any kind of change in academia requires following a long, time-consuming process that can take at least six to eight months. "You have to get approval from your accounting faculty," she explained. "Or if accounting is a department within the school of management, then you need to have the approval of the entire faculty from the school of management. Then it has to go through the committee system at the college, and then it has to get approval from the administration and the board."
Niemotko also described the challenge of guiding students with a lack of clarity herself. "The students are asking very valid questions. And it almost feels like our hands are tied with answers to address that because when you're in such a window of change, it's hard to give clear direction," she said.
"We've gone full circle, and it's kind of baffling as to why," Niemotko continued. "To wind up eliminating the 120 only to have it back now is an interesting turn of events. And it raises issues like, was that really the obstacle?"
Ultimately, the lever has been pulled and most stakeholders are pleased with the change — at least for now. And through this change, the profession has demonstrated its ability to respond quickly to market needs.
"State societies are the ones that were on the ground, talking with practitioners, talking with students, hearing the pain at the point where talent was so constrained," Cryder said. "We're the ones that heard those concerns and translated them into actions and solutions. And we're the ones that got the law changed. I'm really proud of state societies for that because we did it far more quickly than anybody ever thought we could."
Cryder continued, "The ability for those four stakeholder groups — the AICPA, NASBA, state societies and state boards — the ability for those four to work together is going to be so critical for our profession to remain competitive and relevant in the future."
