Americans spend $146 billion and 11.6 billion hours doing their taxes, and most of it is just filling out paperwork

Tax Day is April 15, three weeks away. If you’ve procrastinated doing your taxes so far, that’s probably for a good reason: After all, the fear of a potential jail sentence for accidentally miscounting something looms over you constantly, turning it into a repetitive, redundant, and reiterative, time-consuming process.

Now, there’s not only a price tag on your returns, but on the effort it takes you to complete them—and it’s costly.

How much does it cost to do your taxes in 2026?

A new analysis from Postal, a virtual mailbox and compliance service, found individual tax returns cost American taxpayers a combined $146 billion in time and out-of-pocket expenses this year—roughly $576 per person in labor hours alone, plus an average of $288 in additional expenses like accountants or software. Reviewing data from the OMB and the Bureau of Labor Statistics, the company found Americans will collectively spend 2.1 billion hours on Form 1040 in 2026, or the equivalent of roughly 12 hours per filing—and the IRS expects to receive about 169 million of them.​

Businesses don’t get off any easier. Postal estimates business tax returns cost companies more than $126 billion annually in staffing and expenses, or an average of $9,090 per return. Stack on Form 941—the employer’s quarterly return—and that brings additional costs of $47 billion—with the W-2/W-3 series at $8.8 billion. Even organizations that owe nothing in taxes (those filing to not pay) still absorb more than $6.2 billion in staff and expense burden costs.

“These figures reflect what we see every day,” Max Clarke, cofounder of Postal, told Fortune. “Compliance isn’t difficult because people are careless—it’s difficult because it’s fragmented, deadline-driven, and overwhelmingly manual.”

The numbers are even worse when you consider the labor hours involved in being compliant. The OMB currently lists more than 10,000 forms and documents that individuals and organizations must complete each year. In 2026, federal agencies are projected to receive more than 210 billion responses to compliance forms, requiring an estimated 11.6 billion labor hours. The total federal compliance tab, including out-of-pocket expenses, is nearly $738 billion.

What does tax compliance cost small businesses?

Clarke knows this from the inside. A former M&A attorney and Palantir alum who later built and sold a specialty insurance startup, he started Postal after realizing physical mail—still the primary vehicle for IRS notices and federal agency correspondence—was a massive, unresolved problem for small businesses. His company uses AI to open, scan, and prioritize clients’ mail, flagging what’s urgent and when it’s due. Most small business owners aren’t compliance specialists: They’re people trying to run their companies who suddenly have a 126-page IRS instruction document and a weekend to figure it out.​

“Small businesses and individuals are expected to track dozens of forms and notices across multiple federal agencies, often with little clarity on what’s urgent or what happens if something is missed,” Clarke said. “When deadlines pass, the penalties and follow-on costs can add up fast.”

To quantify how much Americans spend in labor hours each year, the company pulled from an OMB database that legally requires federal agencies to estimate how long each compliance form takes to complete. For cost, Postal cross-referenced those hour estimates against BLS wage data: specifically, average hourly and weekly earnings for all private employees. Multiply the OMB’s estimated hours by those 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. 

New in 2026: The mailing deadline just got riskier

The physical dimension of tax compliance is easy to overlook in an era when everything is digital. But Clarke points out critical IRS and federal agency notices are still sent by mail—and this year, there’s a new wrinkle. Starting in 2026, the USPS will no longer guarantee same-day postmarks on mailed returns, meaning taxpayers who wait until April 15 to drop their envelope in a mailbox risk having the IRS treat it as late.

“When those documents are delayed, overlooked, or misunderstood, people lose time and money trying to recover,” Clarke said.​ There’s an easy fix: entering the 21st century. 

“Our business shouldn’t have to exist. Everything should be fully digitized. Every business should have one single primary key between itself and the government—and all the information should just be read in there, done seamlessly, electronically, without having to worry about things like, did my Department of Labor form get to me.”

The complexity of the American tax system isn’t exactly accidental. Companies like Intuit and H&R Block—whose business models depend on that 126-page instruction document staying exactly as impenetrable as it is—spent millions lobbying against the IRS’s Direct File program, the agency’s effort to let taxpayers file directly for free. Since 2006, Intuit spent $25.6 million and H&R Block spent $9.6 million on lobbying efforts. Direct File was effectively wound down last year.

That’s not to say Clarke or Postal is against taxes (“taxes are good,” he said, adding people should pay for their use of public goods). Instead, he said this was a system designed around friction, where the friction is profitable for a select few and expensive for everyone else.

“The government already has all the information, because of the way payroll providers are reporting,” he said. “It should be telling me exactly what I owe. It should not be up to me to independently compute that number using a diversity of different sources, and risk fines if I’m wrong.”

But that’s not the system we have. Instead, 169 million Americans will spend an average of 12 hours this spring doing math the government could theoretically do for them—and paying, on average, $864 in time and expenses for the privilege.

“At scale, these 11.6 billion hours represent an enormous opportunity cost for the economy,” Clarke said. “That’s time taken away from building businesses, serving customers, or doing productive work. Until compliance requirements are simplified, the biggest gains will come from reducing friction—making it easier for people to see what they need to do, when they need to do it, and what actually matters.”

You’ll have to do your taxes regardless—the question is just how many hours and how much will it cost you.

This story was originally featured on Fortune.com