The cost of tax compliance for large companies increased by 32% from 2017 to 2023, driven by complex international tax rules, the corporate alternative minimum tax, and changes from the Tax Cuts and Jobs Act of 2017. According to the Tax Foundation, multinational companies spent an average of $25.6 million on income tax compliance in 2022 or 2023, with 43% of these costs related to foreign-source income.
Companies’ tax compliance budgets rose by 29% during this period, highlighting that while larger firms may benefit from economies of scale, smaller companies face disproportionate burdens due to tax complexity. The U.S. tax code has expanded significantly, now the largest and most complex among six reviewed countries, contributing to increased filing costs and compliance time.
U.S. taxpayers are expected to spend over 7.9 billion hours on tax compliance this year, costing approximately $413 billion. Companies pay nearly $119 billion annually for income tax returns and an additional $70 billion for quarterly tax forms and depreciation schedules.
Deloitte’s survey of tax and finance executives reveals that tax transparency is becoming a major priority, though balancing compliance and business needs remains challenging. Future political discussions may focus on reducing compliance costs, with some candidates suggesting potential reforms, such as reversing the 2022 requirement to amortize R&D expenses. The Tax Foundation’s survey indicates that tax complexity has notably increased, with companies dealing with numerous federal, state, local, and foreign tax filings.
