If you feel less than enthusiastic about filing your federal income taxes this year, you're not alone. IRS filing data and a recent survey shed light on a growing trend: Many are hesitant to file taxes in 2025.
Ths tax season, the IRS has reported a notable downturn in tax return submissions compared to previous years.
Why? Possible reasons range from concerns about IRS workforce reductions to general economic uncertainty.
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A March survey of 1,003 respondents conducted by Qualtrics on behalf of Intuit Credit Karma also revealed some interesting data points. Nearly a quarter of respondents felt less concerned about making errors on their tax returns this year, while almost half worried about receiving a timely refund.
Meanwhile, according to the survey, 17% of millennials have contemplated not filing at all. They reported a belief that audit risk has decreased due to recent downsizing at the IRS.
So, what does all of this mean for you? Here’s more to know.
Filing taxes 2025: Slowdown at the IRS
Since the start of the 2025 tax filing season on January 27, the number of returns processed by the IRS has fallen by 1.7% ( just over 1.2 million returns) compared to the same period in 2024.
That decline comes despite an average increase in refund amounts and suggests that significantly fewer taxpayers are filing early this year — or at all.
According to Bloomberg (paywall), former IRS Commissioner Charles Retitig relayed the following: “I know thousands of accountants, tax professionals, tax return preparers — and they’re all getting the question, ‘Why should I file my taxes? Why should I pay my taxes? My understanding is the IRS is going to be abolished.”
The impact? The IRS reportedly anticipates a $500 billion decrease in tax revenue this year. (That’s a more than 10% decline compared to last year.) That projected revenue loss is particularly striking compared to the $5.1 trillion collected by the IRS in 2024.
Some attribute the estimated shortfall to widespread disruptions caused by staff reductions and operational changes initiated by the Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk of Tesla and SpaceX.
Here’s what’s been happening that could be contributing to the tax-filing hesitancy this tax season.
DOGE IRS workforce cuts
As Kiplinger has reported, Trump’s DOGE has implemented substantial budget cuts at the IRS, resulting in significant staff reductions. Some say the cuts have impacted the tax agency's ability to process returns efficiently and enforce compliance.
For more information, see IRS Layoffs Cause Doubt, Fear This Tax Season.
As mentioned, reports also suggest the IRS could face a potential revenue drop of as much as half a billion dollars due to some taxpayers betting on the tax agency's diminished audit capabilities.
Some experts caution that, going forward, these cuts could severely hamper the IRS's functionality, weaken the government's ability to collect taxes effectively, and lead to processing delays.
Other things to keep in mind:
- Republican lawmakers have proposed abolishing the tax agency. Trump has floated the idea of replacing the IRS with an ERS (External Revenue Service) and eliminating income taxes in favor of tariffs.
- Trump’s pick for IRS Commissioner, former congressman and auctioneer Billy Long, still hasn’t been Senate-confirmed.
Egg prices and economic uncertainty: Recession ahead?
Eggs have become incredibly expensive in 2025.
Beyond IRS-specific issues, many people in the U.S. are grappling with significant economic challenges, including inflation, low or stagnating wages, and rising costs.
For instance, egg prices have soared to $10 or more per dozen in some areas, and consumer confidence is down. Additionally, economic uncertainty in 2025 has intensified partly due to President Donald Trump's tariff policies.
Many experts warn that tariffs (i.e., taxes on imports that often impact consumer prices) could slow economic growth and increase recession risks. Some point to tariffs as a major factor behind reduced spending and consumer pessimism.
Though it’s worth noting that some U.S. economic forecasts remain optimistic.
Meanwhile, additional surveys find many taxpayers are simply overwhelmed when it comes to filing taxes. The tax code and tax filing process can be incredibly complicated.
Additionally, many who rely on tax refunds to pay bills or purchase essentials worry their refunds will be delayed. Data show that most people use their tax refunds for practical purposes. As of March 17, the average IRS tax refund is $3,271..
- Reportedly, 49% of taxpayers will use their refund to “make ends meet,” about 25% of taxpayers plan to deposit their refunds into a savings account, while 35% intend to use their refunds to pay down debt.
- Other common uses include replenishing emergency funds, boosting retirement savings, and investing in education or home improvements.
IRS audit risk?
Fewer IRS workers focusing on tax compliance is leading some taxpayers to consider taking risks with their returns that they might usually avoid.
According to the Credit Karma survey, millennials are at the forefront of this trend. A notable percentage indicated they might not file taxes this year due to a perceived lower chance of being audited. Nearly half of the surveyed taxpayers doubted the federal tax agency's capacity to double-check filings.
Those findings reflect a broader lack of confidence in the IRS' ability to enforce compliance effectively without a Senate-confirmed Commissioner and with much of its staff already let go or on its way out the door soon.
Can you not file taxes?
Despite these issues and real concerns, most experts caution against failing to file or pay taxes. There are several consequences of not filing or paying.
Financial Penalties: The IRS imposes significant penalties for failing to file or pay taxes. These can include a percentage of unpaid taxes for each month the return is late. There are also penalties for failing to pay, which can increase if the IRS issues a notice of intent to levy.
Even if you owe a relatively small amount, penalties can add up. Interest also accrues daily on unpaid balances annually, compounding the financial burden over time.
Legal Consequences: Tax evasion, which involves deliberately avoiding paying taxes, carries legal risks. It can also result in hefty fines for individuals and businesses, potential prison time, and additional penalties for negligence or underreporting income.
In extreme cases, as Kiplinger has reported, the IRS can revoke passports for individuals with significant unpaid tax debts exceeding a certain threshold.
Other Enforcement Actions: The IRS has various tools to recover unpaid taxes. These include wage garnishment, bank levies, and filing a Substitute for Return (SFR), where the IRS files a return on your behalf based on available data, often resulting in higher tax liabilities.
Filing taxes: Bottom line
For those struggling financially or feeling overwhelmed by their tax obligations, experts recommend exploring options for paying the IRS if you owe like repayment plans or filing extensions, rather than avoiding filing altogether.
And concerning common tax filing mistakes, some experts note that human beings aren’t necessarily the ones who will catch errors on “average taxpayer” returns.
The agency may rely more on automated software to uncover unpaid taxes or filing errors and focus on what some experts have described to Kiplingers as “low hanging fruit,” i.e., Individuals behind on their taxes, non-filers, or taxpayers on repayment plans.
For those daunted by this year's tax season, consult a trusted and qualified tax preparer or financial planner who can help you through the process and ensure compliance with current tax laws.
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