With the IRS receiving increased funding and ramping up enforcement efforts, many taxpayers are wondering: How likely am I to be audited by the IRS in 2025? Despite the agency’s expanded resources, audit rates remain surprisingly low for most Americans. However, the IRS is targeting audits more aggressively at high-income individuals and large corporations while keeping audit rates low for small businesses and taxpayers earning under $400,000.
IRS Audit Rates: A Snapshot
Between 2013 and 2021, less than 1% of all individual tax returns were audited, according to IRS data. For taxpayers earning between $50,000 and $500,000, audit rates have been consistently below 0.5%. Interestingly, low-income households claiming the Earned Income Tax Credit (EITC) have slightly higher audit rates, ranging from 0.7% in 2021 to 1.5% in 2013, as the IRS works to prevent fraud in that program.
Audit Rates by Income Level
- Individuals with incomes over $10 million: Audit rates are expected to increase from 11% in 2019 to 16.5% by 2026.
- Large corporations with assets over $250 million: Audit rates are projected to rise dramatically from 8.8% in 2019 to 22.6% by 20267.
- Taxpayers earning under $400,000: Audit rates remain at historically low levels, with no planned increases.
IRS’s Strategic Focus: Targeting Wealth and Complexity
The IRS’s Strategic Operating Plan outlines a clear enforcement focus on wealthy individuals, large corporations, and complex partnerships. This shift is driven by the recognition that audits of high-income taxpayers yield significantly higher revenue per audit compared to audits of small businesses or middle-income individuals.
Use of Advanced Technology
To enhance audit efficiency, the IRS is increasingly leveraging artificial intelligence (AI) and advanced data analytics to detect inconsistencies, identify high-risk taxpayers, and flag underreported income. These technologies enable the IRS to focus resources on the most significant potential compliance issues.
What Does This Mean for Taxpayers?
High-Income Individuals and Large Corporations
If you earn over $10 million or run a corporation with assets exceeding $250 million, expect a higher likelihood of IRS scrutiny. The IRS is dedicating more resources to these groups to recover substantial unpaid taxes.
Small Businesses and Middle-Income Taxpayers
For most taxpayers earning less than $400,000, audit risk remains low. The IRS has committed to not increasing audit rates for these groups, focusing instead on compliance assistance and taxpayer service.
Special Considerations
- Earned Income Tax Credit (EITC) claimants face higher audit rates due to fraud prevention efforts.
- Cryptocurrency holders, expatriates, and those with foreign income may also face increased scrutiny given recent IRS focus areas.
Conclusion
While the overall chance of being audited by the IRS remains low for most taxpayers, the risk is rising for high-income individuals and large corporations. The IRS’s increased funding and use of AI technology mean audits will be more targeted and efficient. Understanding these trends can help taxpayers prepare and reduce audit risks.
