IRS has 27% fewer workers this year. What that means for your refund.

Core Insights - The IRS is facing significant understaffing, with a 27% reduction in employees compared to the previous year, which may lead to delays in processing approximately 164 million tax returns [1][2] - The One Big Beautiful Bill Act (OBBBA) introduces over 100 changes to the tax code, complicating the filing process and potentially leading to more errors and delays in refunds due to reduced IRS support [5][6] Workforce Reductions and Delayed Onboarding - The IRS started 2025 with 102,000 employees but ended the year with about 74,000, with the Direct File department experiencing an 88% reduction and Online Services facing a complete staff loss [1][2] - Seasonal hiring was delayed due to a government shutdown and changes in the hiring process, resulting in only 2% of planned hires onboarded by December 2025 [2][14] Impact on Customer Service and Refund Processing - The understaffing has severely impacted customer service, with significant cuts in the number of employees available to handle around 100 million phone calls and taxpayer correspondence [3][4] - The department responsible for assisting taxpayers over the phone and in person was only able to onboard 66% of the necessary staff for the tax season, leading to limited support for complex inquiries [4][6] Complications from Tax Code Changes - The OBBBA's complex eligibility rules and phaseouts for deductions and benefits may confuse taxpayers, further straining the IRS's ability to provide assistance during the filing season [5] - The small business/self-employed department saw a reduction of over 37%, while the taxpayer services department was reduced by 21%, impacting the support available for taxpayers [6] Backlog and Processing Delays - A backlog of 2 million returns from previous years may exacerbate delays in processing current refunds, as the IRS made little progress on this backlog during the government shutdown [7] - Efforts to eliminate paper returns and transition to electronic submissions have been hindered by workforce losses, delaying the implementation of automated processes [8] Refund Processing Expectations - The IRS still expects most refunds to be issued within 21 days of e-filing, despite the staffing shortages, although some refunds may take longer due to additional reviews [10]