IRS audit revenue falls 35% following federal workforce reductions

Revenue from US Internal Revenue Service (IRS) audits fell by 35% to $6.5 billion in fiscal year 2025, down from $10 billion the previous year, according to a report from the Treasury Inspector General for Tax Administration (TIGTA).

The decline follows significant workforce reductions aimed at cutting federal costs. TIGTA reported that the number of employees dedicated to auditing and collections dropped to 17,517 by January 2026, a decrease of nearly 10,000 workers compared to fiscal 2024. These staffing losses were linked to cost-cutting efforts by the Department of Government Efficiency (DOGE).

The reduction in personnel has impacted various audit sectors. While large corporate audits increased by 17%, audits of new business partnerships fell by 30%. Additionally, examinations of individuals earning over $400,000 decreased by 26%.

Officials have suggested that technological tools, including artificial intelligence, may eventually allow the agency to identify audit targets and conduct investigations with fewer staff members, though comprehensive plans for these mechanisms have not been released.