What Is the 150 Hour Rule for CPA Licensure?

The path to becoming a Certified Public Accountant (CPA) in the United States traditionally involves the 150-hour rule. This standard requires candidates to complete 150 semester hours of higher education, while a typical bachelor’s degree only provides 120 hours, meaning prospective CPAs must pursue additional education. The American Institute of Certified Public Accountants (AICPA) recommended this higher educational threshold to broaden the knowledge base of new CPAs. The goal was to ensure a deeper understanding of accounting, ethics, and business principles, thereby enhancing the overall quality and reputation of CPA licensees across the country.

Core Educational Subject Requirements

The 150-hour requirement is not just about accumulating credit hours, as state boards of accountancy mandate a specific curriculum. A substantial portion of the coursework must be in upper-division, accounting-specific subjects. Required topics include:

• Financial accounting, which covers the principles of reporting and statement preparation.
• Auditing, which focuses on examination standards and procedures.
• Taxation, detailing federal and state tax laws for individuals and corporations.
• Managerial or cost accounting, which deals with internal corporate financial analysis.

State boards also require credit hours in general business fields to provide a broader context. Common requirements include courses in:

• Business law, covering contracts, corporate structure, and regulatory compliance.
• Finance
• Economics
• Management

Many state boards also mandate a dedicated course in accounting or business ethics. The exact distribution of required hours varies by jurisdiction.

Common Pathways to Fulfilling the 150 Hours

One direct method to meet the 150-hour requirement is to enroll in an integrated five-year accounting program. These programs combine undergraduate and graduate studies, culminating in both a bachelor’s and a master’s degree in accounting and are structured to meet all coursework requirements.

Another common approach is to complete a four-year bachelor’s degree in accounting and then pursue a separate master’s degree. This could be a Master of Accountancy (MAcc), a Master of Taxation (MTax), or a Master of Business Administration (MBA) with an accounting concentration.

A third pathway involves earning a 120-hour bachelor’s degree and then accumulating the remaining 30 credit hours through additional undergraduate courses. These courses, available at universities or community colleges, must align with the state board’s subject matter requirements and can offer more flexibility and be a more cost-effective solution.

State-Specific Rules and Licensure Nuances

The application of the 150-hour rule is controlled by the 55 U.S. state and territorial boards of accountancy, and requirements are evolving. Many states use a “120/150” model, which allows a candidate to take the Uniform CPA Examination after completing 120 semester hours. This system lets candidates pass the exam while working toward the full 150-hour requirement for licensure.

In response to labor shortages, a growing number of states are also enacting alternative pathways. A common alternative allows a candidate with a 120-hour degree to qualify for licensure with two years of relevant work experience, as opposed to the one year required with 150 hours. This change is supported by the National Association of State Boards of Accountancy (NASBA) and the AICPA, which have approved adding this alternative pathway to the model Uniform Accountancy Act (UAA).

Because each board has unique rules, candidates must verify the specific requirements of the state where they plan to practice. NASBA’s website provides links to each state board for the most current regulations.

The Process of Verifying Your Credits

After completing your education, you must have your credits formally verified by your state’s board of accountancy. This begins with requesting that official transcripts from every post-secondary institution you attended be sent directly to the state board or its designated evaluation service. Transcripts submitted by the candidate are not accepted.

The submission is handled through an online portal on the state board’s website where you will create an account, complete an application, and pay any associated fees. You will also list the institutions you attended so the board can match your application with the incoming transcripts.

Once all documents are received, the board or a third-party service will review your coursework against the state’s specific requirements. You will be notified of your eligibility status after the evaluation is complete, which can take several weeks.