The U.S. Government Accountability Office estimates that federal tax fraud costs the government between $116 billion and $304 billion a year. The $304 billion figure is the high end of a modeled range—not a measured loss for one specific year. GAO says the estimate is based on evidence and information from 2018 through 2024 and reflects uncertainty in the available data.
What GAO’s $116 billion–$304 billion estimate measures
In a report published September 25, 2026, GAO estimated federal tax revenue lost to fraud. Its analysis draws on three broad areas: adjudicated and potential fraud cases identified by the IRS; possible fraud within the tax gap; and tax evasion tied to economic activity deliberately hidden from the government, often called the shadow economy. The underlying evidence and information span 2018–2024. GAO report GAO-26-107810
GAO compared the estimated fraud losses with total federal tax liability for tax year 2022, the latest year for which it said that liability estimate was available. On that basis, the range represents approximately 2%–6% of federal tax liability. This is a comparison against 2022 liability, not a claim that every component of the fraud estimate occurred in 2022.
The estimate concerns federal tax revenue. It does not measure state or local tax losses, fraud in federal tax revenue collected by other agencies, or fraud involving nontax federal revenue.
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Why the tax gap is not the same as tax fraud
The IRS tax gap measures taxes not paid voluntarily and on time because of noncompliance. That includes intentional evasion, but also inadvertent errors. The IRS does not estimate what portion of the tax gap is specifically fraud, so the full tax-gap figure should not be described as fraud.
GAO reported the IRS’s projected $606 billion net tax gap for tax year 2022. That is a projection of taxes expected to remain unpaid because of noncompliance—not a fraud-only estimate. The measures also differ in methods and data: GAO’s fraud estimate includes detected criminal fraud and identity theft, which are not included in the IRS tax-gap estimate. The figures overlap in subject matter but are not interchangeable, and comparisons need that qualification. GAO report GAO-26-107810
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How to read the estimate
- $116 billion–$304 billion: GAO’s estimated annual federal tax-fraud loss, based on evidence and information from 2018–2024.
- $304 billion: the upper end of the range, not a precise tally of fraud in a particular year.
- 2%–6%: the approximate share of total federal tax liability for tax year 2022 represented by the range.
- $606 billion: the IRS’s projected net tax gap for 2022 as reported by GAO; it includes noncompliance beyond fraud.
GAO describes the estimate as uncertain because of limitations in the available evidence. It is a modeled estimate, not an audited accounting of every fraudulent dollar. As GAO notes, “Most taxpayers pay their taxes voluntarily and on time.”
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What GAO found about IRS antifraud coordination
GAO found that IRS divisions carry out various activities to protect tax revenue and assess fraud risks, but the agency had not established an agency-wide antifraud strategy or designated a lead entity to coordinate that work. GAO recommended that the IRS document an agency-wide strategy and assign an antifraud entity responsibility for coordination and oversight.
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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →In its September 2026 report, GAO said the IRS partially agreed with both recommendations and GAO continued to consider them warranted. That report describes the status at publication; check the GAO report page for any later recommendation updates.
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