IRS budget cuts in 2026 might not be as bad as expected

After a ridiculously chaotic 2025, the IRS is starting 2026 with some good-ish news. And keep in mind: “Good-ish” is all relative.

Lawmakers in the House could vote on a bill this week that would allocate $11.2 billion to the IRS for fiscal 2026.

That’s lower than the IRS’s $12.3 billion budget last year, but that’s the whole “good-ish is relative” part: Even though this marks the fourth year in a row of flat or decreased funding at the agency, earlier proposals suggested trimming even more of the IRS’s budget.

The proposed measure, if approved, would also strengthen funding for taxpayer services, allocating $3 billion, up $256 million from fiscal 2025, while cutting IRS enforcement funding by $439 million. See? Good-ish.

Bad-ish? Everything else at the IRS. After a slew of job cuts and top brass turnover at the agency last year, there’s concern about its readiness for filing season, which kicks off at the end of January for individuals. (Business tax filing season began January 13.)

“Although the 2025 filing season was not impacted, the IRS is beginning to see the effects of the workforce reduction on post-filing season activities, and we are concerned how this will impact the 2026 filing season,” according to a September report from the Treasury Inspector General for Tax Administration, an IRS watchdog.

More recently, a group of senators led by Elizabeth Warren and Maine independent Angus King voiced “serious concerns” about the upcoming filing season.

“The 2026 tax filing season will present a huge test for the IRS. Since January [2025], the IRS has lost 25 percent of its workforce,” the senators wrote.

“Taxpayers deserve to have the information and assistance they need to file their taxes and receive their refunds in a timely manner,” they continued. “The Trump Administration’s relentless attacks on the IRS threaten its ability to serve the public and undercut its mission to provide taxpayers with top quality service and ensure that our tax laws are enforced with integrity and fairness.”