Introduction to the 2026 Tax Season
The 2026 tax season is expected to be challenging for the Internal Revenue Service (IRS) due to budget cuts and workforce reductions. According to a report from the Treasury Inspector General for Tax Administration (TIGTA), the IRS faced workforce cuts of 17% to 19% of “key IRS functions” for the filing season. These cuts could impact “key processing programs and customer service” going forward.
A bipartisan agreement released in January would provide $11.2 billion for the remainder of the 2026 fiscal year, which is roughly 9% lower than the 2025 IRS budget of $12.3 billion. This reduction in funding could further exacerbate the challenges faced by the IRS. Amid recent staffing reductions, “taxpayers may have to increasingly rely on IRS self-service tools,” according to the TIGTA report.
Impact of Budget Cuts on Taxpayers
The IRS budget cuts could have significant implications for taxpayers. With a reduced workforce and budget, the agency may struggle to provide quality service to taxpayers and enforce tax laws. Taxpayers may experience delays in processing their returns and receiving refunds. Additionally, the cuts could impact the agency’s ability to implement new tax law changes, such as the deductions for tips, overtime, and auto loan interest.
According to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, one of the “biggest challenges” for the IRS will be implementing Trump’s tax law changes. The law is complicated, and the waived reporting requirements for employers add “an additional burden for taxpayers,” she said.
Implementation of Trump’s Tax Cuts
Treasury Secretary and acting IRS Commissioner Scott Bessent stated that the agency was “diligently preparing to update forms and processes” before the passage of Trump’s legislation. However, the complexity of the law and the reduced workforce and budget could lead to challenges in implementation. Taxpayers could see bigger refunds in 2026 due to Trump’s changes enacted in 2025, but the lack of paycheck withholding updates could lead to delays in processing returns.
Taxpayers with an accurate, e-filed return should get their refunds “in a timely fashion,” Holtzblatt said. But it could take longer for paper-filed returns or filings “flagged in processing” for mistakes. Generally, e-filed individual tax returns are processed within 21 days, according to the IRS.
Refund Processing and Delays
New deductions create more opportunities for math errors, which could cause the IRS to flag returns and delay refunds, Holtzblatt said. The average refund for individual filers was $3,052 through Oct. 17, 2025, according to IRS data. Taxpayers can expect to receive their refunds within 21 days for e-filed returns, but paper-filed returns or returns with errors may take longer to process.
It is essential for taxpayers to ensure the accuracy of their returns to avoid delays in processing and receiving refunds. The IRS provides self-service tools and resources to help taxpayers navigate the filing process and avoid common mistakes.
Smart Tip for Readers
To avoid delays in processing and receiving refunds, taxpayers should ensure the accuracy of their returns and consider e-filing, which can reduce the processing time to 21 days. For more information on the 2026 tax season and how to navigate the challenges posed by budget cuts and new tax law changes, visit Here
