IRS staffing is down by 27% this year. Here’s how that could impact your refund.

Core Insights - The IRS is facing significant staffing shortages, with a 27% reduction in employees expected by 2026, leading to potential 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 increasing the likelihood of errors due to reduced IRS support [5][6] Workforce Reductions and Delays - 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][4] Customer Service Impact - 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 taxpayers [4][6] Tax Changes and Complexity - The OBBBA's complex eligibility rules and income thresholds for deductions and benefits may confuse taxpayers, further complicating the filing process [5][6] - 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 automated processes that could streamline filing [8] Refund Processing Expectations - Despite staffing shortages, the IRS still anticipates that most refunds will be issued within 21 days of e-filing, although some may take longer due to additional reviews [10]