Of the roughly $26 billion left to the Internal Revenue Service from the money allotted to it by the Inflation Reduction Act, the agency has spent almost two-thirds, according to a new study.
The report by the Treasury Inspector General for Tax Administration examines what the agency has done with IRA funds as of Sept. 30, 2025 (the end of the government’s 2025 fiscal year), and found that it had spend $15.7 billion thus far.
The IRA originally promised the IRS $79.4 billion, but that sum was whittled down by Congress, being cut last year to just $37.6 billion, and then cut again in January of this year to $26 billion.
The biggest areas of spending were, naturally enough, on employee compensation ($7.3 billion) and contractor advisory and assistance services ($5.2 billion). The IRS significantly reduced its headcount last year, but many of the employees took incentive programs in which they continued to be paid through Sept. 30.
Those expenditures were spread across a number of priorities, including operations support, which was allotted the largest chunk of IRA funding, at $13.7 billion (of which the IRS has spent just under half), and business systems modernization, at $4.8 billion (of which the IRS has spent 60%). Enforcement and taxpayer services come in third and fourth, with $3.8 billion and $3.2 billion, respectively; the IRS has spent effectively all of the former, and over three-quarters of the latter.
TIGTA made no recommendations in its report.
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