Americans to Spend 11.6 Billion Hours Completing Federal Compliance Forms in 2026

Staying compliant with federal regulations requires careful attention to deadlines throughout the year, for both organizations and individuals, as missing key dates can result in penalties, interest charges, and potential legal complications.

It’s estimated that we spend nearly 20% of our total labor hours complying with rules and regulations [1], with those in finance and insurance spending even more time on compliance and form-filling than any other industry. 

Under the Paperwork Reduction Act, the Office of Management and Budget (OMB) now collects and reports the estimated number of responses, hourly burden, and dollar burden associated with federal form completion. We analyzed this information, along with data from the U.S. Bureau of Labor Statistics (BLS), and were able to calculate for the first time how much completing federal tax and other federal compliance forms costs Americans, both in time and money.

Compliance Costs

The Office of Management and Budget (OMB) has approved more than 10,000 forms and schedules that individuals, businesses, and other organizations must complete and file each year. The cost of which is typically borne by those completing the forms and submitting them, often requiring specialised internal and external administrative and professional staff. 

In total, the OMB predicts 210,536,434,539 (210 billion) compliance forms will be received by federal agencies for the year 2026, requiring 11.6 billion hours of effort to complete and over $207 billion in “out-of-pocket” expenses on software, contractors, external accountancy staff, etc.

In all, if we take the most straightforward “time-spent” calculation (Time x Avg Hourly Wage + Benefits [2]), Americans will spend $530,792,270,298 (over $530 billion) worth of time completing federal compliance paperwork and forms, plus spend $207,002,387,518 in external fees.

As such, federal compliance in the U.S. will cost at least $737,794,657,816 ($737 billion) in 2026. However, this is likely higher, given that many forms require specialised skills or staffing to complete.

Federal Agencies With The Most Compliance Forms

Taxes, unsurprisingly, are the core compliance forms that both businesses and individuals face on an annual basis. 

Reviewing White House Office of Information and Regulatory Affairs (OIRA) and Office of Management and Budget (OMB) data, we found that while responses to the Department Of The Treasury account for just 3.3% of responses received by federal agencies, the time spent and time needed to complete them account for 62% of the estimated time burden for federal compliance.

The following table shows the current OMB estimates for the 10 federal agencies that require the most hours annually to meet compliance requirements:

Accounting for over 7.2 billion hours of effort and work, complying with the Department Of The Treasury costs individuals and businesses at least $329 billion annually as a “time-spent” cost. However, as many also turn to additional assistance and support when completing tax and financial forms, the OMB estimates that Americans spend $148 billion. 

This means that Americans are likely to be spending, both in time and costs,  $477,315,469,704 (over $477 billion) completing forms needed to comply with Department Of The Treasury regulations, each year.

However, this figure may not reflect the actual value, as many forms require specialist knowledge and expertise to complete and compile the necessary data. Prior research from the Tax Foundation [3] estimates that adding these nuances could lead to “costs” reaching as much as $536.1 billion.

And that’s just the cost to complete on time. Those who miss various tax compliance deadlines can face penalties ranging from a $60 fine to 25% interest added to their final tax bill.

To understand more about the cost of compliance, we’ve reviewed several ‘core’ compliance forms that businesses and individuals have to complete every year. These include those focused on taxes, as well as an insight into Occupational Safety and Health Administration (OSHA) requirements.

Key Compliance Burdens

For individuals

Form 1040, or the Individual Income Tax Return, which the vast majority of Americans need to fill in each year, is a key compliance task due on “Tax Day” each year. Given the form's relationship to individual incomes, it’s not surprising that 168,800,000 filings and responses are expected to be received by the Department of the Treasury.

However, with each form estimated to take more than 12.6 hours to complete, Americans are likely to spend more than 2.1 billion hours completing their tax returns in 2026, according to the OMB. 

This time has a cost. Multiplying the number of hours required by the current average hourly wage (plus compensation benefits) indicates that Americans will spend more than $97 billion ($97,188,850,000) in time completing their individual tax returns. Or, in other words, $576 each annually.

That’s just on the hourly time spent completing annual income tax returns. Many people also turn to professional tax experts and accountants to help them file and prepare their tax returns, a figure the Office of Management and Budget (OMB) projects to total nearly $48.7 billion.

Adding both the “out-of-pocket” expenses and the hourly time needed to complete individual tax returns, the annual rush to meet the “Tax Day” deadline costs American taxpayers $145,871,850,000 (almost $146 billion) in time and money.

If you have access to or rely on income from an Estate or Trust, your fiduciary will also need to file an additional income tax return. The OMB estimates that more than 3 million people will file Form 1041, and that each form takes an average of 10.4 hours to complete, resulting in a total of 31.9 million hours required.

Given the nature of using a fiduciary to manage the affairs of an Estate or Trust, the OMB estimates that Form 1041 will cost respondents more than $5.5 billion in “out-of-pocket” expenses. 

For businesses

As with individual tax returns, businesses must also report their income to the Department of the Treasury. The OMB estimates that it will receive 13.9 million Form 1120s in 2026 and will incur time costs exceeding 935 million hours for businesses complying with their Business Income Tax Returns obligations.

While many businesses may use in-house and hired tax and accounting staff to help make the process easier, the OMB estimates that completing Form 1120s costs businesses almost $72 billion in “out-of-pocket” expenses. However, given that many companies will need to rely on their staff, we estimate that the annual human cost to businesses is an additional $54.7 billion in staffing hours. Or, in other words, based on the number of responses, a per-form cost of $3,938.

This means, across both “out-of-pocket” and the staffing costs, businesses face a compliance burden of $126,357,754,000 (over $126 billion). 

Another form that many businesses need to be aware of is Form 941, also known as the Employer's Quarterly Federal Tax Return. The OMB estimates that it will receive more than 7.4 million Form 941s in 2026, resulting in more than 470 million hours of work for businesses and costing them nearly $20 billion in out-of-pocket expenses. 

In total, due to the frequency of Form 941 and its content, businesses must allocate more than 63 hours per year to comply, resulting in a total cost of $3,714 in time.

As a result, the total time and cost burden for completing Form 941s amounts to over $47 billion ($47,383,800,000), of which $27.5 billion is attributable to time and $19.9 billion to out-of-pocket costs.

Wage and Tax Statements (Forms W-2/W-3 series) are another critical requirement for businesses that employ staff. More than 301 million forms are received by the Department of the Treasury each year, with the OMB estimating that each form takes approximately 30 minutes to complete. However, when multiplied by the number of responses, businesses spend more than 150 million hours per year completing the Forms W-2/W-3 series.

Given that many Wage and Tax Statement forms are completed by Accounting and Administration staff, our calculations found that compliance imposes at least $8.8 billion ($8,814,416,388) in annual staffing costs. 

However, the OMB hasn’t assigned any “out-of-pocket” expenses, so this figure is likely to be higher when taking into account software and other 3rd party tools and contractors.

Even organizations that aren’t required to pay much or any taxes still have to pay to comply with federal tax regulations. Form 990 pertains to tax-exempt organizations but requires approximately 43 hours to complete, according to the OMB.

OMB figures indicate that 1.7 million forms are completed annually, requiring a total of 73.4 million hours. As with many other business and organizational forms, this will typically require Accounting and Administrative staff to complete, resulting in an overall time cost on tax-exempt organizations of nearly $4.3 billion ($4,299,177,600).

In addition, the OMB estimates that nearly £2 billion is spent by tax-exempt organizations on completing their Form 990s, resulting in an overall compliance burden of over $6.2 billion ($6,262,577,600) for charities and other tax-exempt organizations.

It’s not just taxes that many businesses and individuals must report to federal government agencies and departments to comply with regulations. Many also need to report to the Department of Labor and the Equal Employment Opportunity Commission.

One such compliance record that must be filed with the Department of Labor's Occupational Safety and Health Administration (OSHA) is the record of work-related injuries and illnesses. According to OMB figures, 5,571,568 records are filed annually, resulting in a time burden of 2,161,177 hours for businesses and management.

When we multiplied this figure by the average hourly wage and benefits for workers, we estimated that businesses incur approximately $99 million in costs.

The Tax Forms Which Have the Highest Compliance Costs

Conclusion

Based solely on the average hourly wage and the estimated time burden, Americans spend nearly $531 billion in time completing 10,784 federal compliance forms, including those for tax and labor reporting. 

However, this figure is likely higher when accounting for the Office of Management and Budget’s estimate that an additional $207 billion will be spent on burden dollars for out-of-pocket expenses, such as those incurred by external contractors and software. 

Combining the figures, our analysis of BLS and OMB data reveals that Americans are spending an estimated $737,794,657,816 (almost $748 billion) in hours of work and expenses to comply with federal compliance requirements.

This isn’t even touching on State or more local compliance requirements, which vary widely by location and have different reporting and form requirements. Non-government compliance, such as paying for and arranging utilities, insurance, and dependents, will significantly increase the time burden for both individuals and organisations.

To help stay on top of your compliance, it’s best to keep your dates and documents organized. By using a service such as Use Postal, we help you file and sort documents, set reminders for when to complete them, and save time and money by avoiding the confusion of multiple forms and pages.

Methodology

Our analysis reviewed figures from the Office of Management and Budget (OMB) and the Office of Information and Regulatory Affairs (OIRA), specifically those appearing in the Inventory of Currently Approved Information Collections.

We examined several core federal compliance documents that Americans and American businesses face each year, specifically those related to taxes, to estimate the time and work required to comply with federal regulations.

Using average private wage and average employer compensation cost figures from the U.S. Bureau of Labor Statistics (BLS), we estimated the cost of complying with federal regulations for Americans. 

Using the most recent private wage and employer compensation data, we adjusted the reporting to reflect impacts on individuals and businesses, taking into account reporting that requires senior management and professionals, as well as all levels of employees.

 Sources:

[1] https://pmc.ncbi.nlm.nih.gov/articles/PMC10239538/ - Masayuki Morikawa - Compliance costs and productivity: an approach from working hours

[2] https://www.bls.gov/news.release/ecec.t04.htm - U.S. Bureau of Labor Statistics (BLS) - Employer Costs for Employee Compensation

[3] https://taxfoundation.org/data/all/federal/irs-compliance-complexity-tax-costs/ - Tax Foundation - Complexity Now Costs the US Economy over $536 Billion Annually

[4] https://www.reginfo.gov/public/do/PRAMain - Office of Management and Budget (OMB) - Paperwork Reduction Act reporting tables 

[4] https://www.bls.gov/news.release/empsit.t19.htm - U.S. Bureau of Labor Statistics (BLS) - Average hourly and weekly earnings of all private employees

[5] https://www.bls.gov/news.release/pdf/ecec.pdf - U.S. Bureau of Labor Statistics (BLS) - Employer Costs for Employee Compensation for civilian workers