IRS audit revenue fell 35% in FY 2025

Revenue from IRS audits took a nosedive between fiscal years 2024 and 2025, due largely to the staff reductions the agency experienced in 2025, according to a report by an IRS watchdog.

Examinations revenue fell 35% between FY 2024 and 2025, from $10.0 billion to $6.5 billion, the US Treasury Inspector General for Tax Administration (TIGTA) found. During the same period, the number of new audits of individual tax returns dropped by 30%.

The results should not be surprising, given that 2025 was, let’s say, a turbulent year for the IRS.

The agency lost about 36% of its examinations and collections staff between FY 2024 and January 10, 2026, TIGTA data shows. Over that time period, the division went from 27,217 employees to 17,517. The IRS’s examinations and collection staff is still about 13% smaller than it was in FY 2023, before the agency used $3.38 billion in Inflation Reduction Act (IRA) funds to hire more personnel. “The downstream effects of these reductions are likely to become more apparent over time,” TIGTA wrote.

Overall, IRS revenue from all enforcement operations fell 5% between FY 2024 and 2025, from $98.7 billion to $93.8 billion. Collections revenue dropped only 0.4% during this period, and, in fact, was up 17% from FY 2023. That’s mainly due to the resumption of automated collection notices, which were intermittently paused during the pandemic, TIGTA said. “For example, the IRS sent approximately 3.2 million of these notices to individual taxpayers in 2025, after sending no notices in FY 2023,” according to TIGTA.

Revenues from audits may not increase any time soon: IRA funding for enforcement dried up in December 2025, and the House Appropriations Committee advanced a FY 2027 budget for the IRS that would cut almost $1.4 billion from enforcement. The Treasury Department has also recommended that the IRS cut 2,000 more employees, mainly in enforcement.

Business tax revenue fell 14% between FY 2024 and FY 2025. During the same time period, revenue from individual income taxes increased 9%.

But don’t fear too much for the nation’s solvency, at least where taxes are concerned: In FY 2025 taxpayers paid a record-high $5.3 trillion in total tax revenue, “the most tax revenue ever paid, without adjusting for inflation,” TIGTA reported.