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- A proposed budget bill by the Trump administration could significantly complicate the 2026 tax filing season due to substantial IRS staffing cuts.
- The IRS has lost over 26% of its workforce, primarily through a “fork in the road” resignation offer and staffing cuts.
- The budget includes a 20% reduction in IRS funding, exacerbating existing challenges.
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2-Minute Digest
Essential Context
The Trump administration’s proposed budget has raised concerns about the IRS’s ability to manage the upcoming tax filing season. The IRS workforce has been significantly reduced, with a drop from 102,113 workers to 75,702 over the past year.
Core Players
- Donald Trump – President Trump and proponent of the budget bill
- Erin M. Collins – National Taxpayer Advocate, warning about the risks to the 2026 tax filing season
- IRS – Affected by significant staffing cuts and funding reductions
Key Numbers
- 26% – Reduction in IRS workforce over the past year
- 20% – Proposed reduction in IRS funding for the next year
- 37% – Total reduction in IRS funding when including stripped supplemental funding from the Biden-era Inflation Reduction Act
- 17,500 – Number of IRS workers who took the “deferred resignation program” buyout
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The Catalyst
The National Taxpayer Advocate report highlights that the IRS is facing significant challenges due to the proposed budget bill. The report warns that the reduction in IRS funding and staffing could severely impact the 2026 tax filing season.
“With the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year’s filing season,” Erin M. Collins noted.
Inside Forces
The IRS has seen a mass exodus of employees, particularly probationary workers who did not have civil service protections. Many took a “fork in the road” resignation offer rather than face layoffs. The biggest cuts were in taxpayer services, the small business/self-employed office, and information technology.
The current IRS workforce is not adequately prepared to handle the upcoming tax season, especially with new provisions from President Trump’s legislative package that will retroactively affect the 2025 tax year.
Power Dynamics
The Trump administration’s efforts to shrink the federal bureaucracy have led to these significant staffing cuts. The proposed budget further reduces IRS funding, which could exacerbate the existing understaffing issues.
Erin M. Collins emphasized the need for the IRS to take immediate steps to prepare for the 2026 filing season, including hiring and training seasonal and permanent employees.
Outside Impact
The reduction in IRS funding and staffing could lead to delays and inefficiencies in tax processing. This could impact taxpayers directly, especially those who rely on timely refunds or need assistance with new tax law changes.
The broader implications include potential revenue collection issues and increased taxpayer frustration, which could reflect poorly on the administration’s fiscal management.
Future Forces
Looking ahead, the IRS will need to adapt quickly to manage the new provisions of President Trump’s legislative package. This includes updating tax forms and programming for the 2026 filing season.
Key areas of focus will be:
- Hiring and training additional staff to handle increased workload
- Improving digital tools to enhance taxpayer services
- Addressing potential delays in tax processing and refunds
Data Points
- 102,113 – IRS workforce before the cuts
- 75,702 – Current IRS workforce after the cuts
- 2025 – Year in which significant tax law changes will be implemented
- 2026 – Tax filing season potentially impacted by staffing cuts and funding reductions
The convergence of budget cuts, staffing reductions, and new tax law changes poses significant challenges for the IRS and taxpayers alike. As the 2026 tax filing season approaches, it is crucial for the IRS to take proactive steps to mitigate these issues and ensure a smooth filing process.
