economy
January 23, 2026
How a smaller IRS, budget cuts may impact 2026 tax filing: 'Buckle your seatbelts,' one expert says
IRS staffing and budget cuts could impact the 2026 tax filing season. Here's what taxpayers need to know.
TL;DR
- The IRS expects a challenging 2026 tax season due to fewer staff and budget cuts.
- New tax laws enacted by President Trump, including a $6,000 deduction for seniors and breaks for auto loan interest, tip income, and overtime pay, will impact filings.
- Workforce reductions and budget cuts could affect key IRS functions, processing programs, and customer service.
- A proposed bipartisan agreement for fiscal year 2026 suggests an IRS budget roughly 9% lower than in 2025.
- Taxpayers may need to increasingly rely on IRS self-service tools due to staffing reductions.
- Implementing Trump's tax law changes is a significant challenge, particularly for deductions related to tips, overtime, and auto loan interest.
- New deductions increase the possibility of math errors, which could flag returns and delay refunds.
- Taxpayers might receive larger refunds due to the new tax changes, especially if paycheck withholding isn't updated.
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