Tax Season Updates: Staffing Shortages and New Legislation

This tax season brings some fresh opportunities for savings under the One Big Beautiful Bill Act (OBBBA). However, you might find yourself waiting longer for your refund this year.

The IRS expects a significant backlog, with 27% fewer employees by 2026 compared to last year. This shortfall could potentially affect the processing of an estimated 164 million returns. So, what does this mean for your refunds?

At the start of 2025, the IRS had around 102,000 employees, but that number dropped to roughly 74,000 by year-end. Various departments bore the brunt of these cuts, particularly Direct File, which saw an alarming 88% layoff rate, and Online Services with a 100% reduction.

• The area supporting small businesses and the self-employed was slashed by over 37%, which could impact tax obligations.

• Taxpayer Services, crucial for helping individuals understand tax laws, faced a cut of 21%.

• The IT department, which ensures smooth operations for employees, was reduced by 25%.

• Additionally, the unit responsible for processing both initial and amended tax returns suffered a 17% cut in staff.

Typically, the IRS relies on seasonal hires to manage the influx of tax returns, but recent government shutdowns and changes in the hiring process have delayed these efforts.

By December 2025, departments dealing with tax returns, corrections, and taxpayer support managed to onboard just 2% of the needed staff. Even if they could bring more people on board, the onboarding process could take up to 80 days. So, they won’t be ready in time for this year’s filing season.

The impact on taxpayers, particularly regarding customer service, will be significant. With a drastic decrease in the number of employees who usually handle around 100 million calls and respond to taxpayer inquiries, many may struggle to receive the assistance they need, possibly resulting in filing errors and even longer wait times for refunds.

Moreover, the OBBBA has introduced over 100 changes to the tax code, adding layers of complexity to the process. National Taxpayer Advocate Erin M. Collins points out in her report that while this Act generally favors taxpayers by expanding eligibility for deductions and benefits, understanding the complicated eligibility rules can be daunting. It might even be tough for the IRS to manage accurately during peak filing times.

Many people are likely to have questions about the new changes. However, with reduced staff, some taxpayers may find themselves without sufficient guidance, which could lead to more errors and delays.

Backlog Issues and Paper Returns

A backlog of about 2 million returns from previous years looms over this tax season, adding to potential delays. Despite the IRS keeping employees active during the government shutdown in late 2025, progress has been slow. Efforts to encourage electronic filing over paper returns have also hit a snag due to reduced staffing. The automated system planned to help convert paper submissions to electronic versions remains incomplete, which may slow things down further.

According to recent reports, the IRS website has seen a 49% increase in usage compared to the previous year. Given the staffing cuts, online tools might serve as your best resource for tax-related inquiries this season.

• For general tax filing support, check out helpful resources on the IRS page.

• If you need detailed filing instructions or wish to amend your return, look for step-by-step guides online.

• An interactive tax assistant may provide valuable insights on forms, deductions, credits, and other requirements.

Applying electronically and opting for direct deposit remains the quickest way to receive your refund. The IRS states that most refunds should be issued within 21 days of e-filing, although some cases are likely to take longer due to additional reviews.

If you want to check your refund status, here are three options:

• Visit the IRS website for refund tracking. You’ll need details like your Social Security number, expected refund amount, tax year, and filing status. The system will usually be updated within 24 hours for electronic submissions.

• The IRS2Go mobile app can also help you find tax software and provide other assistance without charge.

• Create an IRS Personal Online Account to see your balance, payments, tax records, and more.

Even with the staffing challenges, the IRS anticipates that most refunds will still be sent within 21 days of filing electronically.

So, keep an eye on your refund status online and be prepared with the necessary information to make the process smoother.