U.S. Treasury Expects Corporate Tax Filing Costs to Rise 3.2%
The latest annual estimate released by the U.S. Treasury in the Federal Register shows that total corporate tax filing costs in the U.S. are expected to reach $131.8 billion in fiscal year 2026, an increase of 3.2% from fiscal year 2025. Compliance time is expected to decrease by 8.3% to 857 million hours, but out-of-pocket expenses are projected to rise by 10.6% to $79.2 billion. This estimate does not account for losses incurred by businesses due to suboptimal tax decisions. The data was developed by the IRS research division, and the public comment period ends on January 14, 2026.
Key Points
- The U.S. Treasury Department issued a notice in the Federal Register on Monday estimating that U.S. businesses will spend a total of $131.8 billion in monetized time and out-of-pocket costs to prepare and file corporate income tax returns and related schedules and attachments in fiscal year 2026, compared with fiscal year 2025 ending September 30.an increase of 3.2%。
- Technical and legislative changes in reporting requirements, including those contained in the One Big Beautiful Bill, are expected to reduce the time businesses spend preparing and completing tax filings by 8.3%, to 857 million hours. The estimated value of the compliance time burden is expected to fall to $52.6 billion in the next fiscal year.
- Meanwhile, the time savings will be offset by an expected rise in out-of-pocket costs for compliance burdens, which are projected to jump 10.6% to $79.2 billion. The document shows these expenses include purchasing tax software, paying third-party tax preparation service fees, and printing and postage costs.
Deep Dive
This latest annual estimate of taxpayer compliance burden comes amid a challenging year for the Internal Revenue Service (IRS), raising questions among businesses about whether the tax agency can smoothly handle the upcoming filing season.
The Trump administration's cuts to the federal workforce have reduced staffing in the IRS department responsible for tax return management by up to 19%, and the Treasury Inspector General for Tax Administration haswarnedthat large-scale cuts could weaken the ability to process refunds, as previously reported by CFO Dive.
In its annual taxpayer compliance burden estimate released Monday, the Treasury Department said that in fiscal year 2025, 13.9 million U.S. businesses spent 935 million hours and $127.8 billion to complete Form 1065 or Form 1120 and all related forms and schedules.
The Treasury said its estimate does not account for any losses U.S. businesses incur from making "suboptimal" choices regarding tax deductions or credits.
The above data was developed by the IRS Office of Research, Applied Analytics and Statistics.
Data released Monday shows that businesses or nonprofit organizations spend an average of 61 hours and 13 minutes per year preparing and filing tax returns and complying with government guidance.
The Treasury plans to submit the estimate for review by the Office of Management and Budget. Any public comments on the document must be submitted by January 14, 2026.
In a related release, the Treasury said Monday it expects 170.1 million individuals or couples to spend nearly 1.95 billion hours and $91.8 billion in monetized time plus out-of-pocket costs in fiscal year 2026 to complete individual income tax returns and related schedules and attachments.