The Internal Revenue Service on June 5, 2026 released its 2025 Data Book, the agency's annual statistical account of a full fiscal year of work. The press release focused on filing volume and taxpayer service. The examination tables in the report itself matter more for affluent households, because they show how sharply audit exposure rises with income.
What the Data Book shows
The IRS processed 271.4 million returns and supplemental documents in fiscal 2025, including almost 162.8 million individual income tax returns, and collected more than $5.3 trillion. On enforcement, the agency closed 497,621 audits, which produced $26.8 billion in recommended additional tax. Of those closed examinations, 12,192 taxpayers, or 2.5%, did not agree with the examiner's findings.
Audits do not only run one way. In fiscal 2025, 16,158 examinations ended with refunds to the taxpayer, totaling $10.4 billion. Corporations received $7.8 billion of that.
The release also gave an early look at the 2026 filing season. Roughly 45% of individual returns claimed at least one of the new benefits from the 2025 tax law: the deductions for tips, overtime and car loan interest, or the enhanced deduction for seniors. As of May 27, the average refund on those returns was more than $3,200.
Audit rates by income
The IRS measures audit coverage by the tax year of the return, not the year the audit closes. It groups filers by total positive income, which adds up positive income items without subtracting losses. The full Data Book treats tax year 2021 as the most recent year outside the statute of limitations period, so it is the cleanest comparison. Rates for 2022 and 2023 can still rise as more audits open.
| Total positive income | Tax year 2021 | Tax year 2022 | Tax year 2023 |
|---|---|---|---|
| All individual returns | 0.3% | 0.3% | 0.1% |
| $500,000 to $1 million | 0.6% | 1.4% | 0.1% |
| $1 million to $5 million | 0.9% | 1.9% | 0.2% |
| $5 million to $10 million | 3.9% | 4.9% | 2.0% |
| $10 million or more | 6.6% | 6.6% | 5.2% |
Two patterns stand out. The first is a steep step at $5 million. For tax year 2021, a return in the $5 million to $10 million band was examined at more than four times the rate of a return in the $1 million to $5 million band. The second is how exposed the very top remains. A return reporting $10 million or more had roughly a 1-in-15 chance of examination for 2021, about 22 times the rate for all individual returns.
The bottom of the distribution is also above average. For tax year 2021, returns with no total positive income were audited at 1.8%, and those with income under $25,000 at 0.5%. The overall picture is U-shaped, with the thinnest coverage in the middle-income bands.
The after-tax math
The dollar figures show why the IRS concentrates resources at the top. For tax year 2021, the agency closed 2,680 audits of returns with $10 million or more of income. Those audits recommended about $469.6 million in additional tax, or roughly $175,000 per closed audit. In the $1 million to $5 million band, 6,777 closed audits recommended about $291 million, or about $43,000 each. In the $5 million to $10 million band, the average was about $73,000.
Not every audit finds something. Of the 2,680 closed audits at $10 million and up, 1,151, or about 43%, ended with no change. In the $1 million to $5 million band, the no-change share was about 21%. Even a no-change audit has a cost, however, in professional fees and staff time to assemble records.
Example: a family business owner reports $12 million of income in a year with a large one-time sale. Based on the 2021 figures, that return belongs to the group examined at 6.6%. A household reporting $800,000 of wages was in a group examined at 0.6%. The difference comes from which income band the return falls in, not from anything specific on either return.
Moves to discuss with your advisor
- Liquidity events, such as a business sale or large equity vest, can push a return into a higher-coverage band for a single year. Households in that position often build a documentation file for the transaction as the year goes on, not after a notice arrives.
- Records that support cost basis, valuations and large deductions tend to matter most in examinations of high-income returns. Keeping them well past the filing date is worth discussing with a CPA.
- Positions that depend on appraisals or aggressive interpretations may deserve a second review before filing, given the higher odds that someone at the IRS will read the return.
What to watch
Coverage rates for tax years 2022 and 2023 will keep moving as examinations open, so next year's Data Book will give a fuller view of those years. The IRS also said it is using expanded technology and advanced analytics to find high-risk areas of noncompliance more accurately. How that changes audit selection at the top of the income distribution will show up in future tables, not in this release.
Sources
After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.
