Every year leading up to Tax Day, Americans face a familiar and frustrating ritual: sorting through receipts, deciphering forms, clicking through software prompts, and hoping they haven’t made a costly mistake.
This annual headache of helping Uncle Sam rifle through your pockets is a personal nuisance and a national time sink that prevents you from doing something more useful and productive with your time. For the 2024 tax year, taxpayers spent a staggering 7.1 billion hours complying with the tax code.
The economic cost of this hidden tax on time, based on private-sector labor costs, comes out to $316 billion. The IRS also estimates that taxpayers incur at least $148 billion in out-of-pocket costs for filing for expenses like software, professional help, printing, and more. All told, tax compliance imposes at least $464 billion in combined costs,nearly as much as the federal government spends annually on education and transportation combined. And even that may significantly understate the true burden, since the IRS has failed to complete cost estimates for many of its most complex and widely used forms.
Tax complexity is a policy choice, and addressing it can be as well. For example, the Tax Cuts and Jobs Act of 2017 (TCJA) bucked the trend of increasing tax complexity. It not only reduced taxes for the vast majority of Americans, but it also simplified the filing process,saving hundreds of millions of hours once spent laboring over tax forms.
One major reform was the near-doubling of the standard deduction, which dramatically reduced the number of taxpayers who need to itemize their deductions. As of 2024, over 90% of filers now take the standard deduction,meaning about 30 million Americans no longer have to slog through additional forms and calculations.
In addition, the TCJA practically eliminated the Alternative Minimum Tax (AMT) for most households. By the time of the 2017 tax reform, the AMT had evolved into a confusing parallel system that required millions of filers to calculate their taxes twice. By significantly raising the AMT exemption and adjusting it for inflation, the TCJA spared millions of middle-class families from this duplicative and time-consuming exercise.
Unfortunately, key provisions of the TCJA are set to expire after 2025. If Congress doesn’t act, millions of filers could face longer forms, higher compliance costs, and more uncertainty in the next tax season. That would be a major step backward at a time when taxpayers are already contending with the lingering effects of inflation, confusing new reporting requirements, and subpar IRS service.
If lawmakers are serious about helping families and small businesses, they should focus on reforms that make tax filing simpler, faster, and cheaper. That starts with permanently expanding the standard deduction to maintain the time savings millions of filers now enjoy. Congress should also restore full-expensing for business investments, a key pro-growth TCJA provision that simplified tax planning and boosted productivity by allowing immediate deductions for equipment and machinery purchases. In addition, policymakers must prioritize IRS taxpayer service upgrades so filers can actually get help when they need it. Finally, modernizing the Service’s outdated technology systems, which still rely on 1960s-era computer programming, would go a long way toward reducing delays and confusion.
As Congress debates future reforms, lawmakers should call on IRS analysts to testify alongside budget experts from the Joint Committee on Taxation and the Congressional Budget Office. These analysts can provide valuable insight into how specific proposals may increase complexity, impose hidden costs, or reduce burdens for everyday taxpayers.
Tax Day should become less of a burden. Americans deserve a tax code that values their time as much as their money. Ideally, taxpayers should be able to figure out their taxes over the course of an afternoon.Currently, the average filer takes 13 hours just to complete a 1040 form. Congress has a rare opportunity this year to lock in reforms that simplify tax filing, lower compliance costs, and make the IRS work better for everyone.
It’s time to stop accepting that the tax compliance burden has to be so heavy. Filing your taxes will never be fun, but with the right reforms, it could at least be done sooner.
