The IRS saw a significant decrease in revenues generated by audits in fiscal year 2025, according to a report released last week by the Treasury Inspector General for Tax Administration (TIGTA), and the decline appears to be driven by the Trump administration’s effort to slash staffing at the nation’s tax agency.
The drop came despite a record level of overall tax collections in fiscal year 2025, totaling $5.3 trillion. Despite the record collections, revenues from enforcement efforts fell, declining from $98.7 billion in fiscal year 2024 to $93.8 billion in fiscal year 2025.
Much of the decline in enforcement revenues was related to a decrease in examination- or audit-related revenues. For fiscal year 2024, IRS audits brought in roughly $10 billion. For fiscal year 2025, that tally dropped to $6.5 billion, a 35% decline.
“Although the IRS hired a substantial number of employees in FYs [fiscal years] 2023 and 2024, in FY 2025 the federal government began efforts to reduce the size of government,” the report says. “As a result, the IRS lost approximately 27 percent of its Examination and Collection staff from FY 2024 to FY 2025.”
The IRS initiated about 30% fewer audits of individuals in fiscal year 2025, TIGTA found. In the Small Business and Self-Employed Division, which typically accounts for the largest share of enforcement-related revenue, new examinations were put on hold from March 2025 through the end of the fiscal year in September “due to uncertainty around the availability of resources,” TIGTA said.
The bottom line: Efforts by Republicans to slash staffing the IRS appear to be reducing revenues from labor-intensive audits. TIGTA warns that revenue reductions may continue and possibly become more pronounced: “While the workforce reductions influenced metrics in FY 2025, the downstream effects of these reductions are likely to become more apparent over time.”