Why 2026 tax season may be more stressful than last year

Core Viewpoint - Taxpayers may face a more challenging filing season due to IRS staff reductions and significant tax law changes, as highlighted in the National Taxpayer Advocate's annual report [1]. Group 1: IRS Staffing and Tax Law Changes - The IRS is operating with 27% fewer employees compared to last year, including a 22% reduction in customer service representatives, while implementing over 100 changes in the tax code [2]. - The tax changes from the previous year's tax and spending package are retroactive to the start of 2025 and are complex, necessitating new forms, guidance, and software updates [2]. Group 2: Impact on Tax Filing Experience - Although most Americans may experience a relatively smooth tax season, the combination of staff cuts and new laws is expected to complicate the 2026 filing season, leading to potential difficulties and increased costs for taxpayers and the IRS [3]. - The successful 2025 filing season was attributed to the IRS having its largest workforce in years and no major tax law changes, contrasting sharply with the upcoming 2026 landscape [3]. Group 3: Complex Tax Changes - Key complex tax changes include deductions for certain tips and overtime, auto loan interest, increased maximum tax deductions for state and local taxes, and an additional senior deduction, all retroactive to 2025 [4]. - The introduction of "Trump accounts for babies" is another significant change requiring a separate form [4]. Group 4: Taxpayer Favorability and Administration Challenges - The new tax changes are generally favorable for taxpayers as they expand eligibility for certain deductions and benefits, but they come with complex eligibility rules, income thresholds, and phaseouts that may be difficult for many taxpayers to navigate [5]. - Historically, major tax law changes of this nature lead to increased errors and more correspondence from taxpayers [5]. Group 5: IRS Preparedness and Refund Concerns - IRS leadership and employees have made efforts to provide guidance and implement necessary changes to forms and instructions ahead of the filing season [6]. - Most refunds are typically issued within 21 days for electronic filers who choose direct deposit, but concerns arise regarding potential delays due to the numerous tax changes and reduced IRS assistance [7].