Taxpayers are expected to spend 6.93 billion hours and more than $477 billion to be in compliance with the 2026 tax filing season, according to a new report released Monday.
Tax Day is Wednesday. The National Taxpayers Union Foundation released a report with estimates on how much time and money Americans are expected to spend.
The report estimated the average American will spend 12 hours and $290 to complete their tax return. The report anticipated a decrease in compliance burdens from its peak of 7.93 billion hours in 2023.
The report estimates that tax compliance costs include $319.7 billion in lost time and at least $157.1 billion in out-of-pocket expenses, including tax software and professional services.
“Time is money,” said Damien Brady, vice president of research at NTUF.
The report found the current tax code contains 4.26 million words and contains provisions that may overcomplicate tax burdens. Brady told The Center Square he was shocked to discover the tax code’s word count length.
“When they first implemented the tax laws it was only supposed to impact just the very wealthy and it was just a few pages long,” Brady said. “Now, there’s hundreds and hundreds of pages of regulations that implement the tax laws.”
The report noted that the tax provisions in the One Big Beautiful Bill and the Tax Cuts and Working Families Act simplified tax compliance burdens for 30 million additional Americans. The report noted that legislation nearly doubled the standard deduction from $6,500 to $12,000 for single filers and from $13,000 to $24,000 for married filers.
In 2024, 90% of Americans took the standard deduction rather than itemizing their deductions. Brady said he expects this legislation to show large benefits.
“It’s a pretty significant time savings for those people versus all the time that would go into itemizing,” Brady said.
The report also found that business owners are paying more in compliance burdens when they do taxes. In tax year 2025, businesses spent, on average, 21 hours filling out the 1040 form, compared to individual filers who only spent eight hours on average.
“It’s time and out-of-pocket expenses that are being diverted from, especially on the business side, investing back into your businesses, hiring new people, increasing productivity,” Brady said. “It’s something to be aware of whenever Congress is enacting new legislation.”
The report also found inflation would play a significant factor in the increased tax burden. The estimated $477 billion in compliance costs is a record high for the estimate.
“The cost of goods have increased first as a result of the pandemic, and the shortages and the shipping issues,” Brady said. “Currently, we’re seeing it again with high gas prices that will flow throughout the economy.”
The report attributed reductions in compliance hours to improved IRS models and simplification of the tax code. Brady called on the IRS to produce tax compliance reports once again in order to give lawmakers more clarity on what portions of the process are most complex.
“There’s administrative things you can do to ease compliance burdens by providing clearer guidance in places where there’s a lot of confusion,” Brady said.
He said there are many areas of the tax code that are out of scope when an individual attempts to access help.
“There’s certain things that they are not allowed to answer,” Brady said. He also called on the IRS to implement clearer guidelines for digital asset regulation and 1099-D forms.
“There’s a lot of data flowing through the IRS and we want to make sure that data is protected and secure,” Brady said.
The report is based on documentation provided by the IRS that estimates time and out-of-pocket costs that taxpayers take on when complying with tax forms. NTUF compiled all information on compliance costs across the various forms of which the IRS provided information.
Brady called on Congress to review the report and seek legislation designed to provide a better tax filing experience for taxpayers across the country. He pointed to the proposed Taxpayer Assistance and Service Act as a model piece of legislation for the future tax code.
The act would digitize tax returns and correspondence, mandate the IRS provide annual tax complexity reports and make the IRS more responsive to taxpayers who need help.
“There’s some good things in there as a starting point for Congress to improve the IRS and improve the administration of the tax code,” Brady said. “Americans definitely deserve a better tax system.”