REG CPA Exam 2026: What's Tested, Study Tips & How Kesler Helps You Pass
WHAT IS THE REG CPA EXAM?
REG (Taxation and Regulation) is one of three mandatory core sections under the 2026 CPA Evolution model. The 2026 AICPA blueprint says REG tests U.S. ethics and professional responsibilities related to tax practice, U.S. business law, and U.S. federal tax compliance for individuals and entities, with an emphasis on recurring and routine transactions. Unlike FAR and AUD, REG focuses heavily on non-accounting content, which can be disorienting for candidates who are strong in financial accounting but have limited tax or legal experience.
REG has had the highest cumulative pass rate of the three core sections in recent years (62.61% in 2024 and 63.12% in 2025), but that does not make it easy. Entity taxation (Area V) carries significant weight at 23-33% and is where many candidates struggle. Basis calculations, particularly for partnerships, are among the topics candidates report as most challenging. The good news: you do not need to memorize specific tax rates or inflation-indexed amounts. The exam provides them when needed.
| REG Quick Facts | Details |
|---|---|
| Section Type | Core (mandatory for all CPA candidates) |
| Exam Duration | 4 hours (plus 15-minute standardized break after testlet 3) |
| Question Format | 72 MCQs (2 testlets of 36) + 8 TBSs (3 testlets: 2, 3, 3) |
| Score Weighting | MCQs = 50% of score, TBSs = 50% of score |
| Passing Score | 75 (scaled, not a raw percentage) |
| Pass Rate | 62.61% cumulative in 2024, 63.12% cumulative in 2025 (highest of core sections) |
| Recommended Study Time | Roughly 100-120 hours (7-10 weeks at 10-15 hrs/week)* |
| Skill Levels Tested | Remembering & Understanding, Application, Analysis |
| Related Discipline | TCP (Tax Compliance & Planning) builds on REG |
| Tax Rates Required? | No. Specific rates and inflation-indexed amounts are provided when needed. |
| 2026 Tax Law Update | OBBBA provisions with 2024-2025 effective dates become testable starting July 1, 2026. |
*Study time is a Kesler estimate based on candidate experience. It is not an official AICPA or NASBA statistic.
REG CONTENT AREAS &
WHAT'S TESTED
REG is weighted heavily toward entity taxation (Area V) and individual taxation (Area IV). Most of your study time should go there. But do not skip business law (Area II), which tends to be more straightforward and can help you bank points.
| Content Area | Weight | Key Topics (2026 Blueprint) |
|---|---|---|
| Area I: Ethics, Professional Responsibilities & Federal Tax Procedures | 10-20% | Professional responsibilities in tax practice, licensing and disciplinary systems, federal tax procedures (audits, appeals, penalties), Circular 230, legal duties of a CPA |
| Area II: Business Law | 15-25% | Agency, contracts, debtor-creditor relationships, business structures (formation, operations, termination), government regulation (employment tax, bankruptcy, FCPA, ACA, worker classification) |
| Area III: Federal Taxation of Property Transactions | 5-15% | Basis of assets, wash sales, organization/start-up/loan costs, MACRS, bonus depreciation, Section 179, intangible amortization |
| Area IV: Federal Taxation of Individuals | 22-32% | Gross income, pass-through items on Form 1040, deductions to AGI and taxable income, qualified business income (QBI) deduction, loss limitations, filing status, credits, estimated-tax safe harbor, net investment income tax (NIIT), self-employment expenses |
| Area V: Federal Taxation of Entities | 23-33% | M-1/M-3 book-tax differences, C corporation taxable income and credits plus state/local nexus and apportionment, S corporation eligibility and shareholder stock/debt basis plus AAA, partnership ordinary income and partner basis, LLC classification, tax-exempt organizations |
⚠️ 2026 Tax Law Update: Under the AICPA pronouncements policy, changes in the Internal Revenue Code and federal tax regulations become testable in the calendar quarter beginning six months after the effective or enactment date, whichever is later. For H.R. 1 (the One Big Beautiful Bill Act), provisions with effective dates in 2024 and 2025 become testable in REG starting July 1, 2026. If you sit before July, the exam tests pre-OBBBA law. Verify your exam date and confirm your study materials match.
DON'T LET THE PASS RATE
FOOL YOU
REG has the highest core pass rate, but candidates still fail for predictable reasons. Here is what catches people off guard.
Entity Taxation Is Dense
Area V (23-33%) is where many candidates struggle on REG. M-1/M-3 differences, C-corp taxable income and nexus rules, S-corp shareholder stock/debt basis and AAA, partnership ordinary income and partner basis, and LLC classification each have their own set of rules that interact in complex ways. Candidates who spend all their time on individual tax and neglect entity tax are taking a significant risk.
Basis Calculations Are Relentless
Basis is one of the most commonly cited trouble spots on REG. You need to track inside basis vs. outside basis, adjusted basis, at-risk basis, and passive activity limitations. Text explanations can turn this into a wall of numbers. Whiteboard drawings make the flow visible.
Business Law Gets Skipped
Area II (15-25%) covers contracts, agency, debtor-creditor, and business structures. Many candidates skip it because "it's not tax." At 15-25% of the exam, that is too much to leave on the table. Business law tends to be more straightforward than entity tax, and candidates who study it can pick up points that provide a cushion against harder questions elsewhere.
Tax Law Changes on a Schedule
Under the AICPA pronouncements policy, tax-code and federal tax regulation changes become testable in the calendar quarter beginning six months after the effective or enactment date, whichever is later. With the OBBBA provisions becoming testable July 1, 2026, candidates need to verify which rules apply to their exam date. Using outdated study materials is a common and entirely preventable failure mode.
Basis calculations need to be seen, not read.
Kesler's Learn N GO whiteboard videos draw out the flow step by step.
REG STUDY STRATEGY
WITH KESLER
REG rewards candidates who allocate study time proportionally to the blueprint weights. Entity taxation gets the most time. Business law gets studied, not skipped. And you build frameworks instead of memorizing individual rules.
SUGGESTED REG TIMELINE*
7-10 WEEKS
First-time REG (10-15 hrs/week)
4-6 WEEKS
REG retake (focused on weak areas)
100-120 HRS
Estimated total study hours
Topic order strategy: Start with individual taxation (Area IV) to build a tax foundation. Then move to entity taxation (Area V), which is the heaviest area. Cover property transactions (Area III) next. Study ethics (Area I) and business law (Area II) throughout and use them as lighter-weight study days.
*These are Kesler estimates based on candidate experience, not official AICPA or NASBA statistics. Individual study needs vary.
REG STUDY TIPS
Spend the Most Time on Entity Tax
Area V (23-33%) and Area IV (22-32%) together make up the majority of the exam. Partnership basis, S-corp shareholder stock/debt basis, C-corp taxable income, and M-1/M-3 differences all need focused attention. Kesler's Learn N GO videos draw out each basis calculation visually.
Don't Skip Business Law
Area II (15-25%) covers contracts, agency, and debtor-creditor. Many candidates report this content is more straightforward than entity tax. Candidates who skip it because "it's not tax" leave significant points on the table. Study it, build a cushion against harder entity tax questions.
Build Frameworks, Not Memorized Rules
There are too many individual tax rules to memorize. Build frameworks: "What increases basis? What decreases it? In what order?" The GEM™ from each Learn N GO video gives you these frameworks as reusable exam-day takeaways.
Verify Your Tax Law Window
Under the AICPA pronouncements policy, tax-code changes become testable six months after the effective or enactment date, whichever is later. Confirm your exam date falls in the correct testing window and verify your study materials match. With OBBBA changes testable starting July 1, 2026, this is more important than usual.
Practice Tax Form TBSs
REG TBSs may include actual tax forms from prior years. Don't be distracted by dates. Complete the form using the rules and rates provided in the question. Practice these early so the format is not a surprise on exam day.
Use Study Funnel for Weak Areas
Kesler's study funnel technology identifies your weakest REG areas so you can target exactly what you need in your final 1-2 weeks. If partnership basis keeps tripping you up, the funnel surfaces those questions automatically.
REG SUCCESS STORIES
🏆
"I'd like to thank especially, Bryan Kesler for creating the wonderful Kesler CPA Review which makes one of the most challenging professional tests in the world more digestible. Without his hard work, it would have taken me much longer and been many times harder to pass each section."
— Jimmy Chilimigras, Youngest CPA in History
Passed at 15 years old. Scores: BEC 86, AUD 75, REG 86, FAR 80. Individual results vary.
⭐⭐⭐⭐⭐
"I HAVE PASSED ALL 4 PARTS OF THE CPA EXAM!! I took 4 months to study REG because it was my last exam and I just wanted to be done. Find a study routine that works for you and use the Kesler study method. It works!!!! After finding Kesler, I never watched lectures again. The KeslerQs were more straight forward to me than Becker and the explanations provided in the answers were more real world based to me so it was easier for me to understand."
— Julie Purscell, All 4 Sections Passed
Individual results vary.
REG CPA EXAM FAQ
Study timelines vary, but many candidates budget roughly 100-120 hours for REG. At 10-15 hours per week, that works out to about 7-10 weeks. Candidates with tax experience may need less time, while those without a tax background may need more. Entity taxation (Area V, 23-33%) and individual taxation (Area IV, 22-32%) tend to require the most study time. These are Kesler estimates, not official AICPA statistics.
REG has had the highest cumulative pass rate among the three core CPA exam sections in recent years: 62.61% in 2024 and 63.12% in 2025. That said, candidates who underestimate entity taxation or skip business law still fail at significant rates.
Candidates commonly report the most challenging REG topics as: partnership basis calculations (inside vs. outside basis), S-corporation shareholder stock and debt basis, property transaction rules (basis, MACRS, Section 179, bonus depreciation), M-1/M-3 book-tax differences, and the differences between C-corp, S-corp, and partnership taxation. Kesler's Learn N GO whiteboard explainer videos draw out each basis calculation step by step so you can see the flow visually.
No. The AICPA has stated that candidates do not need to know specific tax rate percentages or amounts indexed to inflation. If a specific rate or amount is needed to answer a question, it will be provided. Focus on understanding the rules and how to apply them, not memorizing numbers.
Under the AICPA pronouncements policy, changes in the Internal Revenue Code and federal tax regulations become testable in the calendar quarter beginning six months after the effective or enactment date, whichever is later. For the One Big Beautiful Bill Act (OBBBA), provisions with effective dates in 2024 and 2025 become testable in REG starting July 1, 2026. If you sit before July 2026, the exam tests pre-OBBBA law. If you sit after July 2026, you need to know the new provisions. Verify your exam date and confirm your study materials match the correct testing window. Kesler's materials are updated for the current testing window.
Yes. Kesler's REG materials are fully mapped to the 2026 AICPA Blueprint and updated for the current testing window. This includes MCQs with Learn N GO whiteboard explainer videos, task-based simulations, a complete 553-page REG textbook (physical copy available), flashcards, and mentorship covering REG-specific study strategy. All six CPA exam sections are included in every Kesler subscription. View current pricing.
BASIS CALCULATIONS NEED TO BE
SEEN, NOT READ.
Kesler CPA Review is a CPA exam prep course founded by Bryan Kesler, CPA, featuring Learn N GO whiteboard explainer videos, gamification, mentorship, and mobile apps. 68,000+ CPA candidates served since 2015.
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