The IRS is facing one of its toughest years yet, with deep staffing cuts, shrinking budgets, and delays that could impact every taxpayer. These sweeping changes may mean longer waits, fewer audits, and a very different tax season ahead.
IRS August 2025 Update: What You Need to Know Before Next Tax Season
The IRS is experiencing one of its most challenging years in recent history. Over the past year, significant changes to staffing, funding, and operations have reshaped how the agency will function—and what taxpayers can expect moving forward.
Staffing Losses and Experience Gaps
Since our last update, the IRS workforce reduction has shifted slightly. The agency now reports that approximately 25% of its employees have resigned or been laid off, compared to the 30% we estimated previously. Many of these departures were due to deferred resignation offers, most of which were accepted by employees nearing retirement. This means that not only has the IRS lost headcount, but much of its institutional knowledge and experience has walked out the door with them.
Funding Cuts Continue
Despite recent legislative changes that were expected to modernize the IRS, the agency’s budget is being reduced once again—by approximately 23% for the 2025 fiscal year. These funding cuts are contributing to operational slowdowns and reductions in service.
Fewer Phone Operators, Longer Wait Times
In the past few months alone, the IRS has lost around 9,000 phone operators. For taxpayers, this means that reaching a live representative will be more challenging than before. While the IRS is still working to update its systems for the next tax season, these staffing shortages will likely have a noticeable impact on response times.
Delayed Tax Season Start
Traditionally, tax season opens around January 21. However, the IRS now anticipates a delayed start for the 2026 filing season, potentially pushing the opening date to around President’s Day in February. This shift could compress the filing timeline for both taxpayers and professionals, making proactive preparation more important than ever.
Fewer Audits and Compliance Checks
With reduced staffing and funding, the IRS’s examination unit is expected to take the biggest hit. Fewer audits mean fewer cases of noncompliance being caught—particularly among high-income earners and large businesses. While this may sound like good news to some, it can also mean that issues go undetected until much later, potentially resulting in larger penalties down the road.
What This Means for Taxpayers
The takeaway is clear: expect slower service, fewer compliance checks, and a delayed start to the upcoming tax season. If you anticipate needing assistance from the IRS or have complex filing needs, early preparation will be critical to avoid bottlenecks once the season begins.
As always, working with an experienced tax professional can help you navigate these changes, ensure timely filing, and protect against costly mistakes.
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