Senior tax officials are bracing for a sharp drop in revenue collected this spring, as an increasing number of individuals and businesses spurn filing their taxes or attempt to skip paying balances owed to the Internal Revenue Service, according to three people with knowledge of tax projections.
Treasury Department and IRS officials are predicting a decrease of more than 10 percent in tax receipts by the April 15 deadline compared with 2024, said the people, who spoke on the condition of anonymity to share nonpublic data. That would amount to more than $500 billion in lost federal revenue; the IRS collected $5.1 trillion last year. For context, the U.S. government spent $825 billion on the Defense Department in fiscal 2024.
“The idea of doing that in one year, it’s hard to grapple with how meaningful of a shift that represents,” said Natasha Sarin, president of the Yale Budget Lab and a senior Biden administration tax official.
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The prediction, officials say, is directly tied to changing taxpayer behavior and President Donald Trump’s rapid demolition of parts of the IRS. Senior tax agency officials issued detailed warnings about those outcomes to the incoming Trump administration before the president took office, according to records obtained by The Washington Post.
Follow Trump’s first 100 Days
The administration has moved to fire nearly 20,000 agency employees, specifically targeting new hires in taxpayer services and enforcement divisions. It’s already dismissed more than 11,000 workers at the agency, though some of their statuses are unclear pending fast-moving court cases.
The IRS has dropped investigations of high-value corporations and taxpayers, according to several agency employees involved in those inquiries, because it’s had to triage resources to keep internal systems operating. Two agency commissioners have resigned since Trump took office. The IRS’s head of compliance, Heather Maloy, stepped down effective Friday.
The IRS publishes weekly filing season reports that show the number of returns received and how officials are processing refunds. Those reports show the IRS has received 1.7 percent fewer returns this year compared with the same point in the 2024 filing season.
Treasury Department and IRS officials are predicting a decrease of more than 10 percent in tax receipts by the April 15 deadline compared with 2024, said the people, who spoke on the condition of anonymity to share nonpublic data. That would amount to more than $500 billion in lost federal revenue; the IRS collected $5.1 trillion last year. For context, the U.S. government spent $825 billion on the Defense Department in fiscal 2024.
“The idea of doing that in one year, it’s hard to grapple with how meaningful of a shift that represents,” said Natasha Sarin, president of the Yale Budget Lab and a senior Biden administration tax official.
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ADVERTISING
The prediction, officials say, is directly tied to changing taxpayer behavior and President Donald Trump’s rapid demolition of parts of the IRS. Senior tax agency officials issued detailed warnings about those outcomes to the incoming Trump administration before the president took office, according to records obtained by The Washington Post.
Follow Trump’s first 100 Days
The administration has moved to fire nearly 20,000 agency employees, specifically targeting new hires in taxpayer services and enforcement divisions. It’s already dismissed more than 11,000 workers at the agency, though some of their statuses are unclear pending fast-moving court cases.
The IRS has dropped investigations of high-value corporations and taxpayers, according to several agency employees involved in those inquiries, because it’s had to triage resources to keep internal systems operating. Two agency commissioners have resigned since Trump took office. The IRS’s head of compliance, Heather Maloy, stepped down effective Friday.
The IRS publishes weekly filing season reports that show the number of returns received and how officials are processing refunds. Those reports show the IRS has received 1.7 percent fewer returns this year compared with the same point in the 2024 filing season.
