Holiday Report: Americans spend billions in time and money complying with complex tax code

As Tax Day passed on Tuesday, a new study by the National Taxpayers Union Foundation is shedding light on the overwhelming cost Americans face each year just to comply with the U.S. tax system.

(LILAMAX)- As Tax Day passed on Tuesday, a new study by the National Taxpayers Union Foundation is shedding light on the overwhelming cost—both in time and money—Americans face each year just to comply with the U.S. tax system.

According to the study, individual taxpayers spent an average of 13 hours and $290 to file their 2024 tax returns. The burden was even greater for business filers, who faced nearly three times the workload. In total, Americans will devote an estimated 7.1 billion hours and $464 billion in expenses and lost productivity to meet tax obligations for tax year 2024.

Demian Brady, Vice President of Research at the National Taxpayers Union Foundation and author of the report, said the current system places an undue strain on taxpayers. “No American should have to spend more than two or three hours doing their taxes,” Brady said, emphasizing the urgent need for simplification.

The report also highlights the urgent need to modernize the IRS, which still relies on its Individual Master File system—built in the early 1960s. Delayed tech upgrades have contributed to long processing times and poor communication with taxpayers, leading to what the study calls a “confusing, disjointed service.” Advocates argue that smarter technology and better communication tools could reduce compliance burdens and help close the growing tax gap.

The Tax Cuts and Jobs Act of 2017 eased some of the complexity, freeing up hundreds of millions of hours once spent on tax filing. However, several provisions, including the increased standard deduction, are set to expire after 2025, potentially bringing back longer forms and higher filing costs for many Americans.