Potential challenges in 2026 tax filing season due to IRS workforce cuts and budget reduction

From Yahoo Finance: 2025-06-25 10:00:00

A report by an independent watchdog revealed that the IRS lost 26% of its workforce due to staffing cuts associated with Elon Musk’s Department of Government Efficiency, jeopardizing the upcoming tax season. Taxpayers may face impacts from reduced services and a proposed 20% budget cut, potentially affecting revenue collection.

Despite a successful 2025 filing season, the 2026 tax season could face challenges with significant workforce reductions and impending tax law changes. The IRS must prepare now by hiring and training employees to maintain service levels and address potential understaffing issues from Trump’s legislative package.

The IRS is grappling with delays in resolving identity theft cases, taking up to 20 months to assist victims. The agency is handling approximately 387,000 cases, showing a slight improvement from past years but still requiring significant focus to speed up resolution times and prevent financial hardships for victims.

Read more: Trump’s budget bill could complicate 2026 tax filing season after IRS cuts, watchdog warns