IRS collected $3.5 billion less from audits in 2025 after losing 30% of its auditors to DOGE cuts, watchdog says

IRS collected $3.5 billion less from audits in 2025 after losing 30% of its auditors to DOGE cuts, watchdog says

Danni Santana

Sun, September 6, 2026 at 3:30 PM GMT+3 5 min read

The Internal Revenue Service collected less money from audits in 2025 — a direct result of losing many employees to cost cutting measures by the Trump administration, according to a new watchdog report.

The Treasury Inspector General for Tax Administration (TIGTA) said that in fiscal 2025, ending Sept. 30, the IRS collected $6.5 billion in revenue from tax audits, down from $10 billion the year prior.

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At the start of President Donald Trump's second term in 2024, his administration aimed to reduce government spending, including by reducing its total number of employees, through DOGE — Elon Musk's Department of Government Efficiency. This resulted in a 30% drop in the number of auditors at the IRS' disposal.

The effects of that decision now have a data point attached to it, and "the downstream effects of these reductions are likely to become more apparent over time," the report said.

That's because the reduction in staff impacts the IRS' ability to conduct time sensitive investigations to collect unpaid taxes from individuals and corporations that try to under-report what they earned.

Interestingly, the IRS began roughly a third less audits of individuals in fiscal 2025, TIGTA said. One division of the agency did not start new audits for six months because of uncertainty about whether they'd have enough staff to pursue them.

A reversal of the Biden administration's help to the IRS

The decline in audits and staffing is a reversal from efforts under the Biden administration, which approved roughly $80 billion in additional IRS funding via the Inflation Reduction Act of 2022 to hire tens of thousands of new employees and go after bad actors. In 2024, the IRS estimated that the funding would help it recoup hundreds of billions of dollars in additional revenue by pursuing overdue and unpaid taxes.

Since then, the number of IRS employees working in auditing and collections dropped to 17,517, as of January 2026, a decline of almost 10,000 workers from fiscal 2024.

For their part, Trump administration officials have said that leveraging artificial intelligence will help identify tax evaders without needing to rely on as many paid workers.

"Our advanced data and analytic strategies allow us to catch instances of tax evasion that would have been undetectable just a few years ago," IRS CEO Frank Bisignano said In a written April congressional testimony. "Along those lines, the IRS is using artificial intelligence and advanced analytics to identify high-risk areas of non-compliance and fraud with greater accuracy."

Republican lawmakers in favor of cutting IRS resources have also argued that the agency would use extra funding to target middle-class Americans families.

But TIGTA says that reducing staff isn't benefiting the agency in enforcing the nation's tax laws. "We are concerned about how staffing losses are impacting the IRS's ability to ensure that it meets department priorities," it wrote in the report.

Natasha Sarin, a former counselor on tax policy to former Treasury Secretary Janet Yellen, agrees. She told NPR that stripping the IRS of resources is not a money-saving proposition.

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"It's a money-losing one, because you do a less good job of collecting taxes," Sarin said.

"Gutting the IRS is a win for wealthy tax cheats"

Because audits take a long time to complete, some of the declines in audit revenue could be reversed when investigations are finished, TIGTA said.

And despite the significant drop in audit revenue, the IRS collected more tax revenue overall in fiscal 2025. Taxpayers paid $5.3 trillion to the federal government, up 4.2% compared to the year prior. The agency also began 17% more large corporate audits in the fiscal year.

Even so, audits of new business partnerships fell 30%. The IRS also started fewer audits on wealthy taxpayers, with 43,000 examinations of individuals making more than $400,000, down 26% from a year earlier.

In a statement to CBS News, Sen. Elizabeth Warren, a champion of a federal wealth tax, said TIGTA findings are a "dream come true" for high-income earners and corporations.

"Gutting the IRS is a win for wealthy tax cheats and a loss for working people who play by the rules," she said.

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This article originally appeared on Moneywise.com under the title: IRS collected $3.5 billion less from audits in 2025 after losing 30% of its auditors to DOGE cuts, watchdog says

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