According to a recent report from the Treasury Inspector General for Tax Administration (TIGTA), revenue generated from IRS audits experienced a significant decline of 35% in fiscal year 2025, coinciding with the agency’s reduction of thousands of enforcement personnel.
In fiscal 2025, which concluded on September 30, the IRS collected approximately $6.5 billion from audit activities, a substantial decrease from the $10 billion it earned the previous year, as highlighted in the TIGTA report released on August 26.
The report indicated that the IRS’s workforce dedicated to auditing and collections had diminished to 17,517 employees as of January 2026, marking a reduction of nearly 10,000 from fiscal 2024. TIGTA noted that the repercussions of these staffing cuts might become more pronounced over time.
“These workforce reductions pose challenges to enhancing taxpayer services and enforcing tax regulations across the nation,” the watchdog organization remarked. “We express concern regarding how these staffing losses are affecting the IRS’s capacity to fulfill departmental objectives.”
This report follows a previous TIGTA finding, which revealed that the IRS had lost one-third of its tax auditors in the first quarter of the Trump administration. This decline was attributed to budgetary constraints initiated by Elon Musk’s Department of Government Efficiency (DOGE), which aimed to reduce the federal workforce through a combination of layoffs and voluntary resignations.
TIGTA further noted that since audits can take several years to finalize, it is possible that some of the losses might be mitigated as more cases are resolved.
In fiscal 2025, the IRS initiated 17% more large corporate audits compared to the prior year. However, the number of audits targeting new business partnerships fell by 30% due to a major reorganization within the agency, which caused shifts in personnel and delayed training for certain revenue agents.
The agency also conducted fewer audits of high-income individuals, with about 43,000 examinations of those earning over $400,000 in fiscal 2025, reflecting a 26% decrease from the previous year. As of January 2026, the IRS’s Global High Wealth program employed 27% fewer staff than it had before the fiscal 2025 workforce cuts.
The IRS and the Treasury Department did not provide immediate comments in response to inquiries.
Despite the drop in audit revenue, the IRS reported an increase in total tax collections for fiscal 2025, with taxpayers contributing $5.3 trillion in federal taxes, representing a 4.2% rise from the previous fiscal year, according to TIGTA.
This decline in audit revenue marks a departure from 2024, when the IRS aimed to boost tax income through audits targeting wealthy individuals and corporations. The Inflation Reduction Act under the Biden administration allocated $80 billion to the IRS, allowing for an increase in auditor and revenue collector hiring.
In early 2024, the IRS anticipated that this additional funding would help recover hundreds of billions in unpaid taxes. However, Republican lawmakers cautioned that IRS audits could disproportionately affect average Americans and proposed cuts to IRS funding.
Furthermore, the Trump administration has suggested additional reductions in IRS funding for 2027. Policy experts have warned that further budget cuts could hinder the agency’s ability to collect overdue taxes and pursue tax evasion.
According to tax analysts at the Center on Budget and Policy Priorities, a nonpartisan think tank, “The agency currently has fewer revenue agents, responsible for auditing complex tax returns, than it has had since the 1950s, a time when the economy and tax code were significantly less intricate.”
They also noted, “Research indicates that every dollar invested in IRS tax enforcement yields multiple dollars in revenue. Consequently, each dollar removed from IRS enforcement translates to a loss exceeding a dollar in revenue, further contributing to the deficit.”
Edited by Alain Sherter
