Aug 11, 2025
A federal report warns that American taxpayers face a messy tax season following President Trump’s cuts to the IRS — with 25% of the agency’s workforce already decimated.
In a July report highlighting the extent of the cuts, the Treasury Inspector General for Tax Administration says these reductions have “nationwide implications.”
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Not only are the IRS job cuts deep, they’re occurring while the U.S. tax code undergoes a major overhaul. The One Big Beautiful Bill Act introduces new rules for taxpayers and corporations along with new responsibilities for the IRS.
“The confluence of low staffing levels and new policies is a messy mix,” Alex Muresianu, senior policy analyst at the Tax Foundation, told the Washington Times. “I think that is a potential challenge in the coming tax season.”
Here’s why experts are worried about the challenges tax filers could face in 2026 and beyond.
Less staff, more complexity
Soon after Trump took power, his administration slashed the IRS workforce. Between February and May, the agency lost a quarter of its staff — 25,386 workers — through buyouts and layoffs, according to the report.
The agency’s Small Business/Self-Employed unit has now lost 35% of its staff and the Human Capital Office (HCO) has lost 28%.
And that’s just the beginning. Between now and 2027, the Trump administration aims to slash IRS funding in half, including 65% reduction in operational staff by 50% reduction in enforcement staff.
The Tax Law Center reports that will create an “open season for high-end tax evasion.”
Meanwhile, average taxpayers will be dealing with an understaffed and underfunded agency this tax season.
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Impact on your taxes
Even at previous staffing and funding levels, the IRS struggled to respond to inquiries and process returns.
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The National Taxpayer Advocate, the ombudsman for the IRS, reports that the IRS only answered a third of the 38.6 million calls it received in the 2025 tax filing season.
The same report forecasts more calls in 2026 due to tax code changes in the One Big Beautiful Bill.
In other words, expect wait times if you need help from the IRS with your tax filing and longer processing times for tax credits or identity-theft cases that are still pending.
The ongoing layoffs and budget cuts could also have a broader impact on the national economy, which taxpayers will have to reckon with in the long term.
Impact on the economy
The IRS is one of the few government agencies that delivers a positive return on investment. In 2023, the National Bureau of Economic Research reported that every dollar invested in tax audits of wealthy taxpayers resulted in $12 in additional tax revenue.
The Center for Progress estimates the U.S. government will lose nearly $1 trillion ($909 billion) over 10 years. In other words, it could widen the government’s already wide budget deficit.
For businesses and consumers, a wider and more persistent deficit could mean more sovereign debt, potentially higher interest rates and more inflation in the years ahead, according to Yale’s Budget Lab.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
