IRS audit revenue drops 35% as workforce shrinks amid layoffs
A Treasury watchdog report shows IRS audit collections fell to $6.5 billion in fiscal 2025, a 35% decline from the previous year, after thousands of auditors were let go.
According to a August 26 report by the Treasury Inspector General for Tax Administration, the IRS collected $6.5 billion from audits in fiscal 2025, down 35% from the $10 billion gathered the year before. The agency's audit and collection workforce shrank to 17,517 personnel by January 2026, reflecting a loss of almost 10,000 workers since fiscal 2024. While audits of large corporations increased by 17%, audits of new business partnerships fell 30% and the number of examinations of taxpayers earning over $400,000 dropped 26%, with the Global High Wealth program losing 27% of its staff.
The watchdog cautioned that these reductions may increasingly impair the IRS's ability to meet departmental priorities and enforce tax laws. Despite the audit revenue decline, total federal tax receipts rose 4.2% to $5.3 trillion in fiscal 2025. The report also notes that earlier funding boosts under the Inflation Reduction Act have been offset by recent workforce cuts.
Why it matters
Reduced IRS staffing and audit revenue could weaken tax enforcement and affect government revenue.
In this story
