2026 might seem far away, but as we all know, time has a way of sneaking up on us. That’s particularly true when it comes to tax time.
And to complicate things further, next year’s filing season, when we send the Internal Revenue Service our 2025 tax year returns, is expected to be a challenging one.
First, many taxpayers will be taking advantage of new tax breaks in One Big Beautiful Bill Act. This includes four that will apply to a variety of individual filers, such as the bonus deduction for senior citizens, tax exemptions for some tip and overtime income, and writing off interest on auto loans.
Of course, there are specific requirements for all of these, which means lots of filing season questions. And taxpayers who look to the IRS for answers will encounter the second reason next filing season could be frustrating.
There will be fewer IRS employees to help.
Since the beginning of this year, when the Department of Government Efficiency (DOGE) set its sights on streamlining federal agencies, the IRS has seen more than quarter of its workforce leave.
More are expected to follow their departed colleagues since the Supreme Court gave the go-ahead on July 8 for Donald Trump’s executive order calling for mass layoffs at nearly every government agency could go forward while litigation on the legality of the White House move continues.
Finally, the third thing that could make filing season 2026 problematic is that in addition to working with fewer staff, the agency’s overall budget is going to be cut.
The House Appropriations Financial Services and General Government Subcommittee’s first cut of how much money would go to various financial and general services in fiscal year 2026 was even leaner than what Trump had requested in his budget for the IRS.
Predictions of IRS problems: Those potential filing hurdles are the topic of this weekend’s Saturday Shout Outs. They include recent reports from two government agencies (that still are operating, for now) on IRS’ staffing and customer service plans going forward.
The Government Accountability Office (GAO) says in its July 17 report GAO-25-107408 on taxpayer experience that the IRS needs to reassess its methods of determining whether and/or how its improvement projects help taxpayers. The reports introduction notes:
“We found that IRS was implementing a strategy to improve taxpayer services that included more than 150 projects. Such projects were intended to improve live assistance, online services, and more. But IRS hadn’t decided how to assess whether these projects improved the taxpayer experience.
In light of recent funding and staffing reductions, IRS is reassessing these projects. We recommended using evidence to assess how IRS’s service improvement projects affect the taxpayer experience.”
Specifically, according to the GAO, the IRS has not fully established key practices to:
- define taxpayer experience goals related to service improvements;
- generate new evidence from measures, analytical tools, and dashboards to track progress with the taxpayer experience goals;
- involve external stakeholders to help assess the effects of its service improvements on the taxpayer experience; and
- promote accountability for achieving the taxpayer experience goals.
The government watchdog agency proposed the IRS established an evidence-based approach such as by using 13 key GAO-identified practices, shown in the graphic below, to determine the effects of the agency’s efforts to improve taxpayer experience.
The GAO report also acknowledged that IRS changing environment makes it difficult to implement long-term initiatives to improve the taxpayer experience.
That takes us to the changing staffing environment.
Another IRS oversight group, the Treasury Inspector General for Tax Administration (TIGTA), issued a report on July 18 examining IRS Workforce Reductions as of May 2025.
TIGTA’s snapshot assessment found that through May of this year amid the Trump administration’s cost-cutting efforts, 25,386 employees have left the IRS (or separated in government speak), taken a voluntary buyout offer under one of the deferred resignation programs, or used some other incentive to leave.
Another 294 employees were sent termination notices due to reduction in force actions. The departures represent 25 percent of the IRS’s workforce and affect some business units more than others.
Finally, the money, or lack of it, for the IRS.
Let’s start with the White House fiscal year 2026 budget. The Tax Law Center of the New York University School of Law took look at the Trump financial wish and determined that Proposed IRS Cuts Would Declare Open Season for High-End Tax Evasion and Deny Americans Modern Taxpayer Services.
The formal budget “makes clear that the administration is not seeking a return to the IRS as it existed before the modernization funded by the IRA [Biden’s Inflation Reduction Act] began; it is seeking an IRS even less able to provide the services taxpayers deserve and enforce the law than existed before the IRA,” according to the Tax Law Center analysis.
Then there are those on Capitol Hill who want to cut even closer to the IRS bone. That’s spelled out in the official Appropriations Committee summary of its Financial Services and General Government Appropriations Bill, 2026.
While the White House sought to cut IRS funds by 20 percent, the GOP lawmakers’ reductions of 23 percent would, if approved, would bring the budget for the IRS to the lowest levels since 2002.
The tax group at Deloitte took a look at those numbers and elaborate in House appropriators eye 23% cut to IRS funding in fiscal year 2026. They found that “these proposed reductions come on top of earlier GOP-led efforts to successfully claw back funding provided to the IRS under the Inflation Reduction Act (IRA, P.L. 117-169), further diminishing the agency’s enforcement capacity.”
Prepare now: So, what can we taxpayers do to prepare for a possibly frustrating filing season?
First, accept that things might not go as smoothly as we or the IRS would like. Start practicing your meditation or other patience promoting techniques now.
Second, do some pre-filing homework to know what new tax laws effective for the 2025 tax year apply to you.
Third, get help, either by hiring a tax professional or using a service like Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE). That face-to-face guidance should help ease some of your tax concerns.
You also might find these items of interest:
- AI can help the IRS do its job. Are we ready for that?
- IRS watchdog says AI could make for more productive tax audits
- IRS’ 2025 filing season one of the smoothest ever, but Taxpayer Advocate warns of coming tax challenges
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