Americans spend $146 billion and 11.6 billion hours on their taxes, with most of that effort going into filling out paperwork

(SeaPRwire) –   April 15, three weeks from now, is Tax Day. If you have put off filing your taxes up to this point, you likely have a very valid reason: The constant threat of possible jail time for making an accidental calculation error hangs over you nonstop, turning the whole process into a repetitive, redundant, extremely time-consuming task.

Right now, there is a price tag attached not just to the amount you owe on your returns, but also to the effort you put into completing those filings — and it is very expensive.

What is the cost of filing your taxes in 2026?

A new analysis from Postal, a virtual mailbox and compliance service provider, found that individual tax returns cost American taxpayers a combined $146 billion in time spent and out-of-pocket costs this year. That breaks down to roughly $576 per person in labor hours alone, plus an average of $288 in extra expenses for services like hiring accountants or purchasing tax software. After reviewing data from the OMB and the Bureau of Labor Statistics, the company found that Americans will spend a collective 2.1 billion hours filling out Form 1040 in 2026, equal to around 12 hours per individual filing. The IRS expects to receive roughly 169 million of these forms this year.​

Businesses do not get a lighter burden by comparison. Postal estimates that business tax returns cost companies over $126 billion each year in staffing and related expenses, averaging out to $9,090 per return. Add in Form 941, the quarterly filing required for employers, and that brings an extra $47 billion in costs, plus another $8.8 billion for the W-2/W-3 form series. Even organizations that have no tax liability (those filing to confirm they do not owe anything) still take on more than $6.2 billion in staffing and administrative burden costs.

“These figures align with what we see every single day,” Max Clarke, cofounder of Postal, told . “Compliance is not difficult because people are careless — it is challenging because it is disjointed, tied to strict deadlines, and almost entirely manual.”

The numbers look even more striking when you account for all labor hours tied to general compliance obligations. The OMB currently lists over 10,000 forms and documents that individuals and organizations are required to complete every year. In 2026, federal agencies are projected to receive more than 210 billion total submissions for compliance forms, which will demand an estimated 11.6 billion labor hours. The total federal compliance cost, including out-of-pocket expenses, comes to nearly $738 billion.

What does tax compliance cost small businesses?

Clarke has first-hand experience with these challenges. A former M&A attorney and Palantir alum who later founded and sold a specialty insurance startup, he launched Postal after realizing that physical mail — still the main channel for IRS notices and federal agency communications — is a huge, unaddressed problem for small businesses. His company uses AI to open, scan, and prioritize mail for clients, flagging urgent items and their corresponding deadlines. Most small business owners are not compliance experts: They are people focused on running their companies, who are often suddenly faced with a 126-page IRS instruction manual and only a weekend to figure out how to meet filing requirements.​

“Small businesses and individual taxpayers are expected to keep track of dozens of forms and notices from multiple federal agencies, often with very little clarity on what is urgent or what consequences they face if they miss something,” Clarke said. “When deadlines pass, penalties and related follow-up costs can accumulate very quickly.”

To calculate how much Americans spend in labor hours on compliance each year, the company pulled data from an OMB database that legally requires federal agencies to estimate how long it takes to complete each compliance form. To calculate associated costs, Postal cross-referenced these hour estimates with BLS wage data, specifically the average hourly and weekly earnings for all private-sector employees. Multiply the OMB’s estimated hours by these fully loaded labor costs, add the OMB’s own out-of-pocket expense projections for software, contractors, and external accountants, and you get the total compliance price tag. 

2026 update: Mailing tax returns now carries higher deadline risk

The physical component of tax compliance is easy to overlook in an era where almost everything is digital. But Clarke notes that critical IRS and federal agency notices are still sent via postal mail, and there is a new complication this year. Starting in 2026, the USPS will no longer guarantee same-day postmarks for mailed tax returns, meaning taxpayers who wait until April 15 to drop their filing envelope in a mailbox run the risk that the IRS will consider their return late.

“When those documents are delayed, overlooked, or misunderstood, people lose significant time and money trying to fix the resulting issues,” Clarke said.​ There is a simple solution: bringing the system into the 21st century. 

“Our business should not have to exist. Every part of this process should be fully digitized. Every business should have one single unique identifier for all interactions with the government, and all information should be accessible through that system, processed seamlessly and electronically, so people don’t have to worry about issues like whether their Department of Labor form ever arrived.”

The complexity of the American tax system is not an accident. Companies like Intuit and H&R Block — whose business models rely on that 126-page instruction document staying as confusing and hard to navigate as it currently is — have spent millions lobbying against the IRS’s Direct File program, the agency’s initiative to let taxpayers file their returns directly for free. Since 2006, Intuit has spent $25.6 million and H&R Block has spent $9.6 million on lobbying efforts. The Direct File program was effectively shut down last year.

This is not to say that Clarke or Postal opposes taxes: “taxes are good,” he said, adding that people should pay their fair share for the public goods they use. Instead, he says the current system is intentionally designed around unnecessary friction, friction that is profitable for a small group of companies and costly for everyone else.

“The government already has all the required information, thanks to the reporting rules for payroll providers,” he said. “It should be able to tell me exactly how much I owe. It should not be my responsibility to calculate that number on my own using a range of different sources, and risk fines if I get it wrong.”

But that is not the system we currently have. Instead, 169 million Americans will spend an average of 12 hours this spring doing calculations that the government could theoretically complete for them — and pay an average of $864 in combined time and expenses for the privilege of doing so.

“At a national scale, these 11.6 billion hours represent an enormous opportunity cost for the economy,” Clarke said. “That is time taken away from growing businesses, serving customers, or doing other productive work. Until compliance requirements are simplified, the biggest improvements will come from reducing friction: making it easier for people to know what they need to do, when they need to do it, and what actually matters.”

You will have to file your taxes no matter what — the only question is how many hours you will spend on the process, and how much it will end up costing you.