Will the IRS collect more in taxes this year than last year?
Yes refers to: For tax year 2026
Short Answer
The model sees potential mispricing: the IRS collecting more in taxes for tax year 2026 at 80.5% model vs 64.0% market, suggesting a high probability of increased tax collection.
1. Executive Verdict
- Total federal government receipts are projected to rise 4.6% in FY2026.
- Growth in receipts for 2026 is bolstered significantly by new tariff collections.
- OBBBA's new tax deductions are fully incorporated into CBO's FY2026 projections.
- Higher-than-expected inflation in 2026 likely boosts IRS tax collections.
- Corporate tax receipts are projected to decline more than individual income receipts.
- Diverging investment and consumer spending trends influence tax receipt projections.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| For tax year 2026 | 64.0% | 80.5% | Strong economic growth is expected to boost individual and corporate tax collections. |
Current Context
Federal government budget estimates indicate a projected increase in annual revenue, rising from approximately $5.49 trillion in fiscal year (FY) 2025 to $5.87 trillion in FY 2026 [^] . Income tax receipts are specifically forecast to grow from $3.35 trillion in FY 2025 to $3.70 trillion in FY 2026 [^]. Despite these revenue growth projections, the U.S. federal budget deficit for FY 2026 is trending towards $2 trillion, primarily due to increased government spending and recent tax relief measures, including the One Big Beautiful Bill Act (OBBBA) [^][^].
Economic growth is driven by AI, offsetting slowed consumer spending. The U.S. economy in 2026 is marked by resilient business investment, particularly within the artificial intelligence (AI) sector, which is counteracting a slowdown in consumer spending [^][^][^]. Consumer spending has been negatively affected by ongoing inflation and energy shocks stemming from the conflict in Iran [^][^][^]. This dynamic economic landscape influences overall tax collection despite the projected revenue increases.
Tax law changes, including new deductions, are increasing refunds. For tax year 2026, several legislative changes are impacting taxpayer liabilities and refunds [^][^]. These include inflation-adjusted tax brackets and increased standard deductions [^]. Additionally, the One Big Beautiful Bill Act (OBBBA) introduced new deductions for tips, overtime, and car loan interest [^]. These combined measures have contributed to higher average tax refunds for taxpayers [^].
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
This prediction market has exhibited a sideways trading pattern, with the probability of a "YES" outcome oscillating within a defined range. The price has been contained between a support level around 56.0% and a resistance level at 68.0%. Starting at 63.0%, the market currently sits at 64.0%, indicating minimal net change and a state of equilibrium. The total traded volume of 593 contracts is relatively low, suggesting a lack of strong conviction from market participants and contributing to the range-bound price action. The market sentiment appears to be cautiously optimistic, consistently pricing the probability above 50%, but this optimism is tempered by uncertainty, preventing a breakout from the established trading channel.
The price fluctuations within this range can be explained by the conflicting economic data provided. The initial strength, which pushed the price towards the 68.0% resistance level, likely reflects the influence of federal budget estimates projecting significant growth in annual revenue and income tax receipts for fiscal year 2026. However, the subsequent pullbacks and failure to sustain higher levels appear to be driven by countervailing news. Reports of a federal budget deficit trending towards $2 trillion, fueled by increased government spending and tax relief measures such as the One Big Beautiful Bill Act (OBBBA), have introduced doubt about the net increase in tax collection.
This push-and-pull dynamic between positive revenue forecasts and concerns over deficits and tax cuts has kept the market in consolidation. The price action suggests traders are weighing these opposing factors, with neither side gaining enough momentum to establish a definitive trend. The sideways movement and low volume indicate the market is waiting for more conclusive data or developments that could clarify whether revenue growth will outpace the effects of increased spending and tax relief. The current price of 64.0% represents a state of cautious consensus that tax collection will likely increase, but not with a high degree of certainty.
3. Market Data
Contract Snapshot
The market resolves to "Yes" if the IRS collects more tax revenue in 2026 than in 2025, based on verification from the IRS Data Book; otherwise, it resolves to "No." The market opens on February 3, 2026, and will close early if the outcome occurs before the final deadline of December 31, 2027, at 10:00 am EST. Payout is projected to occur 30 minutes after the market closes.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Last trade probability |
|---|---|---|---|
| For tax year 2026 | $0.72 | $0.34 | 64% |
Market Discussion
Traders are currently leaning towards "Yes," expecting the IRS to collect more taxes in 2026 than in 2025, with the market probability hovering around 68%. Arguments for "Yes" are largely based on the "base rate" expectation of year-over-year growth in tax revenue, driven by factors like increasing US population and continued positive inflation. The primary argument for "No" hinges on the possibility of a recession, which could lead to a temporary decrease in inflation and, consequently, lower overall tax collection.
4. How do macroeconomic forecasts for business investment versus consumer spending in 2026 influence projections for total tax receipts?
| AI-driven capital expenditure growth 2026 | 7% [^][^] |
|---|---|
| Projected federal tax receipts FY 2025 | $5,244.1 billion [^] |
| Projected federal tax receipts FY 2026 | $5,632.0 billion [^] |
Macroeconomic forecasts for 2026 predict diverging investment and spending trends. In 2026, macroeconomic forecasts indicate a structural imbalance where business investment, particularly AI-driven capital expenditure, is projected to grow robustly by 7% [^]. Conversely, consumer spending is expected to decelerate due to rising energy costs, inflation, and an erosion of purchasing power [^][^]. Despite these differing trajectories, US federal budget revenue estimates project total receipts to grow in 2026 compared to 2025 [^].
Total federal tax receipts are projected to increase with national income. Federal tax revenue generally scales with overall economic activity, as it is based on percentages of individual and corporate income [^][^][^]. While these economic shifts may affect the composition of tax receipts between corporate and individual sources, the nominal growth in projected national income supports a year-over-year increase in total federal tax collections. Specifically, federal income and social insurance tax receipts are estimated to rise from $5,244.1 billion in fiscal year 2025 to $5,632.0 billion in fiscal year 2026 [^].
5. To what extent do official FY2026 revenue projections from the CBO account for the impact of new deductions under the OBBBA?
| OBBBA Revenue Reduction (2026-2035) | $4.9 trillion (over the 2026–2035 period) [^][^] |
|---|---|
| Projected FY2026 Federal Revenue | $5.6 trillion [^][^] |
| FY2026 Revenue as Share of GDP | 17.5 percent [^][^] |
CBO projections for FY2026 fully incorporate the OBBBA's new deductions. The Congressional Budget Office (CBO) extensively accounts for the revenue impact of the One Big Beautiful Bill Act (OBBBA), specifically including new deductions for tips, overtime, a senior standard deduction, and car loan interest. The CBO's February 2026 Budget and Economic Outlook forecasts a significant reduction in net tax revenues, estimating approximately $4.9 trillion over the 2026–2035 period due to the OBBBA [^][^]. However, these anticipated revenue losses are partially mitigated by permanent provisions from the Tax Cuts and Jobs Act (TCJA) and substantial revenue increases stemming from new tariff policies [^][^].
Total federal revenue for FY2026 remains strong despite new deductions. Despite the revenue-reducing measures introduced by the OBBBA, the CBO projects total federal revenue of $5.6 trillion for FY2026, with revenue as a share of GDP expected to reach 17.5 percent [^][^]. While the OBBBA introduces new deductions that reduce taxable income, CBO projections alongside other economic analyses indicate that total nominal tax collections may still experience a rise in 2026. This potential increase is attributed to factors such as overall economic growth, inflation, and the positive impact of new tariff policies [^][^].
6. How does the projected growth in individual income tax receipts for FY2026 compare to the projected growth in corporate tax receipts for the same period?
| Individual Income Tax Receipts (FY 2026) | $2,629.9 billion [^] |
|---|---|
| Corporate Income Tax Receipts (FY 2026) | $398.6 billion [^] |
| Projected Decline in Corporate Tax Receipts (FY 2026 vs FY 2025) | 11.8% [^] |
Individual income tax receipts are projected to decline less than corporate tax receipts. For fiscal year 2026, individual income tax receipts are anticipated to decrease by approximately 1.0% compared to fiscal year 2025. In contrast, corporate income tax receipts are projected to experience a significantly larger decline of 11.8%.
Individual income tax receipts are forecast to decrease slightly in FY2026. This 1.0% reduction represents a decline from $2,656.0 billion in fiscal year 2025 to a projected $2,629.9 billion in fiscal year 2026.
Corporate tax receipts are projected to experience a more substantial reduction. Corporate income tax receipts are forecast to decrease from $452.1 billion in fiscal year 2025 to $398.6 billion in fiscal year 2026, accounting for the 11.8% projected decline. These projections are detailed in the FY 2027 Budget of the U.S. Government (Analytical Perspectives) [^].
7. Which U.S. Treasury reports will offer the earliest reliable data on tax receipt trends for fiscal year 2026?
| DTS Availability | By 4:00 p.m. on the following business day [^][^] |
|---|---|
| MTS Release Schedule | 8th workday of the month following the reporting month [^][^] |
| DTS Primary Use | Real-time monitoring of fiscal year tax collections [^][^][^] |
The Daily Treasury Statement (DTS) offers the earliest reliable tax receipt data. This report provides the earliest reliable data regarding U.S. government tax receipt trends for fiscal year 2026 [^][^]. It typically becomes available by 4:00 p.m. on the business day following the reporting period [^][^]. This rapid reporting makes the DTS a valuable tool for researchers conducting real-time monitoring of fiscal year tax collections [^][^][^].
The Monthly Treasury Statement (MTS) provides definitive, official, and reconciled tax data. In contrast to the DTS, the MTS offers more definitive, though slower, reporting of tax receipt data. It is released on the 8th workday of the month subsequent to the reporting month [^][^]. The MTS functions as the official source for monthly government budget results, utilized for consolidated, reconciled monthly totals to enable accurate year-over-year performance comparisons [^][^][^][^][^].
8. What impact would higher-than-expected inflation in 2026 have on total IRS tax collections via bracket creep versus indexed standard deductions?
| Standard Deduction (Single 2026) | $16,100 (for single filers) [^][^] |
|---|---|
| Standard Deduction (Married Filing Jointly 2026) | $32,200 (for married couples filing jointly) [^][^] |
| Projected Direct Revenue FY 2026 | $6,186.2 billion [^] |
Higher-than-expected inflation in 2026 would boost IRS tax collections. This increase would occur primarily due to greater bracket creep, as the annual prospective indexing of tax brackets and standard deductions for 2026 would not fully address the new, unexpected inflation [^][^][^][^]. This situation would cause nominal incomes to be pushed into higher tax brackets. This dynamic, combined with the use of Chained CPI-U for adjustments, is projected to contribute to increased federal tax revenue over time [^].
Bracket creep increases tax burdens despite stagnant real income. This phenomenon happens when inflation pushes nominal income into higher tax brackets, causing a rise in tax burdens even if real purchasing power remains unchanged [^][^][^][^]. While the IRS attempts to mitigate this effect by annually indexing tax brackets and the standard deduction to inflation using the Chained CPI-U, these adjustments are prospective [^][^][^][^]. They do not account for past liabilities or any new, unexpected inflation that emerges after their determination [^][^][^][^]. For tax year 2026, specific inflation-based adjustments have already set the standard deduction at $16,100 for single filers and $32,200 for married couples filing jointly [^][^]. However, if 2026 inflation turns out to be higher than anticipated, these already-established adjustments would prove insufficient to fully offset the new inflationary increase, leading to an intensified impact from bracket creep [^][^][^][^][^][^].
9. What Could Change the Odds
Key Catalysts
Federal government receipts are estimated to reach $5,475.7 billion in fiscal year 2026, an increase of $239.3 billion (4.6%) over the $5,236.4 billion collected in fiscal year 2025 [^] . Government: Analytical Perspectives FY 2027">[^]. While tax revenue is projected to rise in 2026 and 2027, this growth is supported significantly by new tariff collections rather than purely by income tax expansion, especially given the enactment of the One Big Beautiful Bill Act (OBBBA) which introduced new tax cuts [^].
Bullish catalysts for revenue include resilient AI-driven capital investment and economic growth, while bearish risks include potential tariff refunds following court rulings, higher energy costs, and the revenue-reducing impact of the OBBBA tax provisions [^] [^] . Economic forecasts suggest GDP growth of roughly 2.2% to 2.3% in 2026, with revenue growth also expected to continue into 2027, with official projections estimating $5,921.0 billion for FY2027 [^][^].
Key Dates & Catalysts
- Expiration: December 31, 2027
- Closes: December 31, 2027
10. Decision-Flipping Events
- Trigger: Federal government receipts are estimated to reach $5,475.7 billion in fiscal year 2026, an increase of $239.3 billion (4.6%) over the $5,236.4 billion collected in fiscal year 2025 [^] .
- Trigger: While tax revenue is projected to rise in 2026 and 2027, this growth is supported significantly by new tariff collections rather than purely by income tax expansion, especially given the enactment of the One Big Beautiful Bill Act (OBBBA) which introduced new tax cuts [^] .
- Trigger: Bullish catalysts for revenue include resilient AI-driven capital investment and economic growth, while bearish risks include potential tariff refunds following court rulings, higher energy costs, and the revenue-reducing impact of the OBBBA tax provisions [^] [^] .
- Trigger: Economic forecasts suggest GDP growth of roughly 2.2% to 2.3% in 2026, with revenue growth also expected to continue into 2027, with official projections estimating $5,921.0 billion for FY2027 [^] [^] .
12. Historical Resolutions
No historical resolution data available for this series.
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