The taxonomic resolution of macroinvertebrate community data needs careful consideration, to ensure that research objectives in pure and applied freshwater scientific research are met. The level of taxonomy used may be driven by time and financial restrictions associated with the increasing resources and effort needed to identify organisms to a lower taxonomic resolution. This paper aims to assess the influence of taxonomic resolution on the understanding of long-term (1985–2006) benthic macroinvertebrate community response to changes in the hydrological regime. There were marked differences in the number of taxa included in the analysis when comparing ‘species’- and ‘family’-level data used to derive lotic-invertebrate index for flow evaluation (LIFE) scores, particularly among species rich orders, such as Ephemeroptera, Plecoptera, Trichoptera and Coleoptera. The performance of the partial least squares (PLS) regression models of hydrological variables and the LIFE scores derived for different taxonomic levels were compared. Coefficients of determination were higher for species-level LIFE data than for the same data resolved to family level. Results demonstrate that the species-level LIFE data produced significant model components while those derived from family-level data were not; although both models indicated the dominance of hydrological indices quantifying the duration and magnitude of the hydrological events. We conclude that there is a growing need to resolve faunal data to species level to adequately fulfil operational and legislative obligations for river management and conservation purposes. Copyright © 2011 John Wiley & Sons, Ltd.