IRS audit revenue plummeted 35 percent to $6.5 billion in fiscal year 2025 following federal workforce reductions under the Trump administration. A report from the Treasury Inspector General for Tax Administration links this decline to a workforce reduction strategy that cut roughly 30 percent of IRS audit personnel. The IRS began over 30 percent fewer audits of individuals in 2025 compared with the prior year.
In one major division of the agency, officials did not start new audits for six months because of uncertainty about whether they would have enough staff to conduct them.
The decline in enforcement efforts comes after the Biden administration tried to revitalize the agency’s ability to go after the wealthy and large companies, approving roughly $80 billion in additional funding for the agency and hiring tens of thousands of new employees. But Republicans and Mr. Trump reversed those efforts, canceling much of the additional funding and downsizing the work force.
Trump administration officials have said that technology like artificial intelligence could help the agency better select taxpayers to audit and more efficiently conduct investigations without the need for as many employees, though it has not publicly detailed its plans for those tools. Frank Bisignano, who is leading the I.R.S. as its first ever chief executive officer, has dismissed concerns about the agency losing tens of thousands of employees last year.
While audit revenue plunged, other enforcement efforts saw less dramatic changes, with the I.R.S. gathering roughly the same amount of tax revenue from mailed notices and phone calls about taxes owed. The I.R.S. restarted several collection programs in 2024 that had been suspended during the pandemic, according to the report.
Overall, tax revenue still increased last fiscal year, reaching a record $5.3 trillion. Most American tax revenue comes from payments automatically withheld from workers’ paychecks, and so overall revenue levels largely reflect the performance of the economy and inflation. The I.R.S. estimates that roughly $700 billion in taxes owed under existing law goes unpaid every year.
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