Business & Finance

IRS audit revenue fell 35% in fiscal 2025 following staff layoffs, watchdog reports

A Treasury watchdog found that enforcement staff cuts of nearly 10,000 workers coincided with a drop in revenue collected from audits.

Updated Sep 1, 2026 · 16:22 UTC1 reports

The short version

IRS audit revenue fell to $6.5 billion in fiscal 2025, down 35% from the $10 billion collected the previous year.
The decline followed major staff reductions linked to cost-cutting efforts by the Department of Government Efficiency, with the auditing and collections workforce dropping by nearly 10,000 employees.
While audits of large corporate entities increased, examinations of wealthy individuals and business partnerships fell significantly.

The IRS collected $6.5 billion from audits in fiscal 2025, down from $10 billion in fiscal 2024, according to a report by the Treasury Inspector General for Tax Administration (TIGTA).[CBS News]
The IRS auditing and collections workforce declined to 17,517 employees by January 2026, a reduction of almost 10,000 workers compared to fiscal 2024.[CBS News]
The staff reductions occurred alongside cost-cutting initiatives by the Department of Government Efficiency (DOGE).[CBS News]
Audits of individuals earning more than $400,000 fell 26% to about 43,000, and audits of new business partnerships declined by 30%.[CBS News]
The IRS initiated 17% more large corporate audits in fiscal 2025 than in the previous year.[CBS News]
Despite the drop in audit revenue, total federal tax collections rose 4.2% to $5.3 trillion during fiscal 2025.[CBS News]

The Treasury watchdog noted that because audits can take years to complete, some of the audit revenue declines could potentially be reversed as outstanding cases are closed.[CBS News]