Zero-Knowledge Proofs for Tax Compliance: Verifying Taxpayer Information Without Exposing Sensitive Data
Zero-Knowledge Proofs (ZKPs) could make tax compliance more privacy-preserving by allowing taxpayers to prove specific claims, such as income falling within a required range or eligibility for a deduction, without exposing an entire tax return. MIT’s zkTax prototype demonstrates this approach using digitally signed tax records, selective disclosure, and independently verifiable proofs. Such systems could reduce unnecessary exposure of sensitive financial and personal information while preserving auditability and verification.