Highlights from Treasury’s FY 2025 Budget Request

The Department of Treasury requests $14.4B in FY 2025 discretionary funding, a 1.2% increase over the FY 2024 CR level. Note that remaining comparisons will be to FY 2024 estimates of continuing resolution amounts. The somewhat small increase in requested funding is driven by the Internal Revenue Service’s request for $9.1B to maintain annual funding at current levels. Nonetheless, Treasury’s discretionary budget contains several nuggets of increased IT spending.

Additional FY 2025 agency requests at Treasury include $312M for Departmental Offices, a 14% increase above FY 2024. The increase in funding includes an additional $5M to support a Chief AI Officer at the department to oversee responsible use and development of the technology, and to develop an enterprise-wide AI strategy. Moreover, the FY 2025 budget supports the expansion of Treasury’s network sensor placement program with an additional $2M to enhance cyber protection of Treasury and financial sector systems.

Treasury’s intelligence arm, the Office of Terrorism and Financial Intelligence (OIA), requests $231M in FY 2025, an increase of 7% over FY 2024. Funding includes additional private sector experts to increase OIA’s intelligence analysis and expand intelligence reporting. Additionally, OIA requests an additional $3M to support the operation and maintenance of the new Treasury Foreign Intelligence Network hybrid cloud solution, which is expected to be completed in FY 2024.

The department also requests $150M for its Cybersecurity Enhancement Account (CEA), a $50M increase over FY 2024. Increases under the CEA include security logging (+$29M), zero trust (+$13M), cloud enterprise investment (+$10M), other cyber priorities (+$6M) and universal encryption (+$1M).

Further funding highlights for IT-related priorities throughout Treasury’s discretionary budget include:

• An additional $182M to centralize IT commodity applications and services under the Treasury Franchise Fund. IT initiatives in the centralization include cloud enterprise services ($68M), continuous diagnostics and mitigation ($64M) and Treasury’s wide area network ($50M).
• An additional $11M to the U.S. Mint to recompete the agency’s primary IT services contract for all agency IT operations except for cyber. The additional funding supports an anticipated expansion in scope of the new contract to eliminate current service deficiencies.
• An additional $9M at the Bureau of Fiscal Service to migrate off existing on-premises mainframe and to cloud service providers.
• An additional $3M at the Bureau of Fisal Service to bolster evidence-based activities, including data and statistical analysis.
• An additional $2M at the Alcohol and Tobacco Tax and Trade Bureau to build an integrated online filing system.

Treasury IT Budget Request

Investments within Treasury’s IT Budget, found in the Federal IT Dashboard, total $9.0B in FY 2025, sustaining levels from FY 2024. Of that, IRS IT programs total $6.2B in FY 2025, followed by Fiscal Service with $1.2B.

Notable funding changes among investments in the department’s FY 2025 IT budget request include:

• IRS Tax Account Management with $663M, a $78M increase over FY 2024 to process a variety of tax filing entities and maintain centralized access to tax records and other topes of financial transactions.
• IRS Network Services with $607M, a $71M increase over FY 2024 to create and maintain all IRS networks, including onsite, remote and cloud networks.
• IRS Cybersecurity with $554M, an $88M increase over FY 2024 and includes all architectures, standards and technologies used to protect and defend all aspects of IRS IT systems.
• IRS Case Management with $486M, a $99M increase over FY 2024 and includes case work, case reporting and analytics that require a combination of IRS business personnel and electronic workflows.
• IRS Enterprise IT Management with $435M, a $123M decrease from FY 2024 for all costs associated with IT management and strategic planning.
• IRS Digital Services with $375M, a $213M decrease from FY 2024 and includes self-service and online options allowing taxpayers and stakeholders to interact on with IRS websites and web applications.

IRS IT Modernization

As the IRS moves forward with robust IT modernization initiatives, the budget request details high priority areas of focus in FY 2024 and FY 2025 according to the agency’s Strategic Operating Plan (SOP). Priority areas include digitization, particularly digitizing paper upon receipt by the agency and processing the information throughout the IRS through automation. The agency is also prioritizing enhanced live assistance capabilities and self-service and online accounts. Moreover, the IRS plans to utilize advanced analytics to proactively identify and minimize the impact of tax scams while ramping up efforts to notify affected taxpayers.

According to a recent GAO report on IRS progress with IT modernization, the agency reported successful completion in almost all modernization activities in FY 2022 and 2023. The report also states the IRS is expected to release a modernization roadmap soon to include the technology objective of the SOP. The roadmap is expected to provide additional insight to the agency’s expected outcomes and results in the next two years.