Trump-Era Cuts Slash Workforce, Could Disrupt IRS in 2026

Trump-Era Cuts Slash Workforce, Could Disrupt IRS in 2026/ Newslooks/ WASHINGTON/ J. Mansour/ Morning EditionA federal watchdog has warned that the IRS could struggle in the 2026 tax season after losing 26% of its staff due to Trump-backed budget cuts. The agency is understaffed and unprepared to handle new tax law changes, raising risks of delays and reduced service. Millions of identity theft cases also remain unresolved, exacerbating the looming crisis.

Quick Look

• IRS Staffing Plunge: The IRS has lost nearly 26% of employees over the past year, dropping from 102,113 to 75,702, largely due to buyouts under the Department of Government Efficiency’s “fork in the road” program.
• Funding Cuts Incoming: Trump’s proposed budget would slash IRS funding by 20%, which amounts to a 37% cut from funding levels after the Biden-era Inflation Reduction Act’s supplemental boost.
• Tax Season Risks: The combination of fewer staff and major tax law changes could lead to a chaotic 2026 tax filing season, with delays, outdated information, and reduced service capacity.

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Trump-Era Cuts Slash Workforce, Could Disrupt IRS in 2026

Deep Look

1. Oversight Watcher Sounds Alarm

• The IRS’s staffing plunge resulted from mass buyouts, particularly in taxpayer services, small business offices, and IT departments—17,500 employees accepted a deferred resignation rather than risk layoff.
• Erin M. Collins, National Taxpayer Advocate, warns that such deep cuts will likely compromise service and revenue: “A reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected.”

2. 2026 Filing Season in Jeopardy

• The 2025 season was reportedly one of the strongest in recent years—but Collins cautions that without immediate action, next year could be troubled: “With the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year’s filing season.”
• Key preparations like staffing and training for both seasonal and permanent roles are lagging, potentially leaving the agency under-resourced.

3. New Tax Legislation Adds Pressure

• Trump’s budget includes provisions that retroactively affect the 2025 tax year, requiring IRS systems and forms to be overhauled mid-cycle.
• The House bill halts Employee Retention Credit claims filed after Jan. 31, 2024—impacting millions of taxpayers. Historically, such law changes drive a sharp increase in taxpayer support calls, further stretching IRS capacity.

4. Identity Theft Backlog Persists

• As of the end of the 2025 season, about 387,000 identity theft cases were unresolved—improved from last year’s 500,000 backlog but still taking up to 20 months each to resolve.
• Collins insists the IRS must dramatically shorten resolution times to prevent delays—especially for taxpayers depending on refunds.

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