The CPA pipeline problem has been described, studied, and lamented for years. What changed in 2024 and 2025 is that the profession finally started rewriting the rules that created it. Fourteen states have now passed legislation establishing alternative pathways to CPA licensure, the AICPA and NASBA formally endorsed a 120-hour route in their 9th edition Uniform Accountancy Act in July 2025, and at least one state, Minnesota, has plans to sunset the 150-hour requirement entirely.
Most managing partners are tracking the headlines. Far fewer have worked through what the changes mean for their next five hires. The candidate pool is starting to shift in ways that affect job descriptions, sourcing strategy, and credential requirements at the recruiting brief level. A regional firm that updates its hiring approach to match the new licensure landscape will close searches several weeks faster than one that does not, in a market where every week of an open seat is real money.
The broader shortage data, the 30 percent decline in accounting graduates over a decade and the 73-day average fill time for CPA-required roles documented in the CPA shortage and what it means for your hiring strategy, set the context. The pipeline reform is the response. This piece walks through what is actually happening and what it means for hiring at a regional firm in 2026.
The 150-Hour Rule Is Quietly Being Dismantled
The 150-hour requirement was adopted by Florida in 1983 and rolled across the country through 2001. By the mid-2000s it was the universal standard for CPA licensure. Three decades later, the profession's own data have made the case against it.
MIT research cited by the C. Aubrey Smith Center found that the 150-hour requirement caused a 14 percent drop in new CPA applicants and a 26 percent drop in minority applicants relative to what would have happened without the rule. Those numbers are not modeled projections. They are the measured impact of an extra year of education that costs roughly the same as the first year of post-licensure salary, on a profession competing with finance and technology careers that do not have a comparable barrier.
Minnesota's CPA society proposed alternative pathway legislation in 2022 and faced opposition from both the AICPA and NASBA, which warned that any state allowing licensure with fewer than 150 hours would lose mobility privileges across state lines. Minnesota proceeded anyway. Ohio became the first state to actually sign alternative pathway legislation into law in January 2025. Virginia, Utah, and several others followed within months. As of mid-2025, fourteen states have passed some version of legislation creating alternative routes to CPA licensure, with bipartisan support that has been notable for both its breadth and its speed.
The AICPA and NASBA initially resisted, then softened, and in May 2025 formally amended the Uniform Accountancy Act to include a 120-hour bachelor's degree plus two years of professional experience as an officially endorsed alternative pathway. The 9th edition of the UAA, released in July 2025, codifies this position. The 150-hour pathway remains an option, but it is now one of several rather than the only path.
What this signals at the profession level is that the supply-side argument finally won. The decline in applicants, the inability to compete with adjacent professions on time-to-credential, and the disproportionate impact on minority candidates created enough pressure that the bodies that originally championed the 150-hour rule are now formally proposing alternatives to it.
What the New Pathways Actually Look Like
The 120-hour plus two-year experience pathway is the most common alternative model and the one the UAA 9th edition formally endorses. Under this structure, a candidate completes a bachelor's degree in accounting, accumulates two years of qualifying professional experience under CPA supervision, and passes the CPA exam. There is no master's degree requirement, no additional 30 credit hours, and no extended education timeline beyond the standard four-year undergraduate program.
Ohio's HB 238, signed in January 2025, became the template for several other state implementations. The Ohio bill allows CPA licensure with a bachelor's degree plus two years of work experience, or alternatively a master's degree plus one year of experience. Both pathways exist alongside the original 150-hour route, giving candidates flexibility based on their educational and career situation.
Virginia's bill, passed in early 2025, takes a similar approach with effective date of January 1, 2026 (pending final approval). The Virginia version allows licensure with 120 hours and two years of experience, or with a master's degree and one year of experience. Utah's bill passed unanimously in March 2025 and follows a comparable model.
California's path has been slower but is moving. The California Board of Accountancy voted in November 2024 to support legislation eliminating the 150-hour requirement, and the state is actively working through Assembly Bill 1175, introduced in February 2025, to formalize the change.
Minnesota is the outlier in scope. Where most states are adding alternative pathways while keeping the 150-hour route intact, Minnesota is the only state currently planning to sunset the 150-hour requirement entirely.
The mobility issue is the substantive complication. When all states had the same 150-hour standard, a CPA licensed in one state could practice across state lines without complication. With the new pathways varying by state, a CPA licensed under a 120-hour pathway in Ohio may not automatically have practice rights in a state still requiring 150 hours. Some states are writing automatic mobility provisions into their legislation. The AICPA and NASBA are advocating for what they call an individual-based mobility model, which places responsibility on each CPA to verify they meet the licensure requirements of any state where they intend to practice. The mobility question will keep evolving for the next two to three years as more states pass legislation and the standards rationalize.
For a regional firm hiring locally, the mobility question matters less than the candidate-pool question. A firm in Ohio or Virginia is looking at a candidate pool that includes 120-hour-pathway candidates the firm could not have considered two years ago. A firm in a state still requiring 150 hours can still hire those candidates, but the licensure will need to follow the firm's home-state rules.
The AICPA's Experience, Learn and Earn Program
The Experience, Learn and Earn program, often referred to as ELE, is a separate but related response to the pipeline problem. Rather than reducing the educational requirement, ELE creates a structured pathway for candidates to complete the additional 30 credit hours through paid work combined with affordable online coursework.
The mechanics are straightforward. A candidate who has finished a bachelor's degree in accounting joins a participating employer in an entry-level role. While working, they take affordable online courses through accredited universities to accumulate the additional 30 hours required under the traditional 150-hour pathway. The employer typically supports the program through paid work hours, study time accommodations, and in some cases tuition assistance. The candidate becomes CPA-eligible faster and at materially lower cost than completing a traditional master's program.
The ELE program piloted with limited enrollment and has grown to 94 participants across more than 50 employers as of mid-2025. The numbers are small relative to the scale of the shortage, but the program is expanding and the structure is replicable. For regional firms that want to participate directly in pipeline rebuilding without waiting for state legislation to take effect, ELE is the most direct mechanism currently available.
Whether ELE is the right fit for a specific firm depends on capacity and willingness to support a candidate through the credential process. Firms that already have strong onboarding programs and a culture of investing in junior staff can integrate ELE participants without significant operational disruption. Firms that hire junior staff with the expectation that they will arrive credentialed and producing immediately may find ELE participation less straightforward.
I put together a full breakdown of how regional firms are competing for talent in this market in the CPA Firm Talent Playbook, available for download at insidefinancesearch.com/cpa.
What This Means for Managing Partners Hiring in 2026
The pipeline reforms are real and the trajectory is clear, but the practical impact on the candidate pool a regional firm sees this year is modest. Reform takes years to flow through to licensed candidates. A 120-hour-pathway candidate licensed in Ohio in 2025 had to be a college junior or senior when the legislation passed. The first material wave of new-pathway CPAs will start showing up in regional firm searches around 2026 and 2027, and the volume will grow over the following three to five years as more states implement and more candidates choose the alternative routes.
What managing partners can do now is update the assumptions baked into their job descriptions and candidate evaluation. A firm that requires an active CPA license on day one for every senior associate or manager search is excluding a growing pool of CPA-eligible candidates who could be licensed within 12 to 24 months of joining. For some seats this is the right requirement. For others it is a holdover from a candidate-rich market that no longer exists. The article on hiring strategies for regional accounting firms covers the broader hiring approach in detail, including when to flex on credential requirements and when to hold the bar.
For multi-state firms, the mobility question deserves attention now. The 9th edition UAA gives the profession a unified framework, but state implementation varies and will continue to vary for the next two to three years. A firm with offices in multiple states should track the licensure rules in each state where it operates and understand how a candidate licensed in one state can practice in the others. The complexity is manageable but not automatic.
The AICPA's ELE program offers a direct participation channel for firms that want to invest in pipeline rebuilding rather than waiting for the supply side to recover on its own. Participation requires real investment in candidate development, but the structure works for firms that already see junior staff as a long-term build rather than a near-term hire.
The CPA pipeline problem will not be solved by any single reform. The 150-hour rule changes, the ELE program, and continued attention to compensation and culture all need to work together over a five to ten year horizon. The profession is finally moving on the supply side after a decade of debate, but the firms that benefit most are the ones that update their hiring approach to match the new landscape rather than waiting for the candidate pool to look the way it did in 2014.
If you are working through a search at a regional CPA firm or thinking about how to build your pipeline strategy for the next two to three years, reach out at michael@royalsearchgroup.com or through Royal Search Group.