The purpose of this study is to examine the effects of tax audits and incentives for compliant taxpayers on taxpayers' tax reporting behavior. To achieve this research objective, a laboratory experiment was conducted under hypothetical scenarios with working professionals primarily employed in accounting and finance departments. The independent variables of this study are tax audit (low level, high level) and incentives for compliant taxpayers (no incentive, exemption from tax audit in the following period, and faithful reporting tax credit), employing a 2×3 between-subjects experimental design. The dependent variable of this study is the underreporting rate (= (actual income − reported income) / actual income). The experimental results showed that tax audits, which have been traditionally employed, had a significant effect on the reporting behavior of experimental participants. In contrast, the effect of incentives for compliant taxpayers showed lower statistical significance (p = .116). However, among the experimental groups, the group that received both a high level of tax audit and an economic incentive such as a faithful reporting tax credit exhibited the lowest underreporting rate. Accordingly, if tax authorities combine rigorous tax audits with substantive and economic incentives for taxpayers, they may be able to more effectively induce faithful tax reporting by taxpayers.