IRS tax revenue reaches record high but enforcement fell

Taxpayers paid the IRS $5.3 trillion in fiscal year 2025, up 13.2% from fiscal year 2023 and the highest amount ever, without adjusting for inflation, according to a new report. 

The report, released Monday by the Treasury Inspector General for Tax Administration, found enforcement revenue reached a record $98.7 billion in FY 2024 before declining to $93.8 billion in FY 2025, mainly due to a 35% decrease in examination revenue.

After the IRS did a substantial amount of hiring in fiscal years 2023 and 2024 thanks to the increased funding from the Inflation Reduction Act of 2022, the IRS lost approximately 27% of its Examination and Collection staff from FY 2024 to FY 2025, due to cuts by the Elon Musk-led Department of Government Efficiency. 

"While the workforce reductions influenced metrics in FY 2025, the downstream effects of these reductions are likely to become more apparent over time," said the report.

The IRS has not only endured staffing cuts, but also budget cuts since the infusion from the Inflation Reduction Act. However, the TIGTA report noted that annual appropriations from Congress remained $12.3 billion from FY 2023 through FY 2025, including approximately $5.2 billion to $5.4 billion annually for enforcement. The IRS also exhausted $3.8 billion in supplemental Inflation Reduction Act enforcement funding as of Dec. 31, 2025.

Collection revenue increased 17% from FY 2023 to FY 2025, offsetting declines in other enforcement revenue categories, primarily due to resumed automated collection notices. The IRS sent about 3.2 million notices to individual nonfilers in FY 2025, compared with none in FY 2023.

Examination revenues increased 41% from FY 2023 to 2024 before plunging 35% in FY 2025, which coincided with increased staffing followed by steep workforce reductions. From FY 2024 to 2025, examinations started for individual returns plummeted 30%, including a 27% decline for taxpayers with incomes over $400,000.

TIGTA made no recommendations in the report, and there was no response from an IRS official included in the report.