How The IRS Is Navigating Tax Season In 2026

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0:25Whether you sat down and finished your taxes months ago or you put it off until recently, taxes are one of those tedious but required parts of life. Once you send them off to the IRS, you assume that's that. The agency can handle your return. In short order, the IRS will send you a refund or take some money you still owe. This tax season, though, things look a little less clear. The Trump administration has caused tumult at the IRS over the past year. 25 ,000 employees left the agency in 2025. The entity Doge successfully terminated around 4 ,000 probationary employees who were new to the agency, and approximately 21 ,000 took deferred resignations or quit.

1:07Meanwhile, over three-quarters of the agency's senior leadership left, and Republicans in Congress took back billions of dollars the IRS had received to improve its systems and then gave it more tax code changes to enforce. What's the effect of all that on the tax filing season? I'm Jen White. You're listening to the 1A Podcast. Today, we talk about taxes and our democracy. What's the link? And how important is it that our main tax agency, whether you're fond of it or not, functions well? We'll be back with answers to these questions and more after this quick break. Stay with us.

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3:09Enter your license plate or VIN, get a real offer down to the penny, and schedule a pickup on your time. No surprises. Sell your car today at Carvana.com. Pickup fees may apply. Welcome back to the 1A podcast. We're talking about changes at the IRS under President Trump's second administration and what that means for you and your taxes. Let's get into our conversation and meet our guests. Joining us in studio is Richard Rubin. He's a U.S. tax policy reporter for The Wall Street Journal. Richard, welcome back to the program. Thanks for having me. Joining us from Washington, D.C. is Nina Olson. She was the National Taxpayer Advocate at the Internal Revenue Service until 2019.

3:48She's now Executive Director for the Center for Taxpayer Rights. Nina, welcome back to you. Hello. Thank you for having me, too. And joining us from Washington, D.C. is Vanessa Williamson, senior fellow at the Brookings Institution, where she covers tax policy. She's also the author of The Price of Democracy, The Revolutionary Power of Taxation in American History. And Vanessa, yet again, welcome back to the program. Oh, glad to be here. So, Richard, as we near what is officially tax day, how would you describe the state of the IRS right now as a functioning agency, given the changes we've described over the past 15 months?

4:23So I want to separate it into two buckets. The two main parts of the service are service and enforcement. And the administration, to get through this tax season, which is very politically important to them, has tried to make the service part work as well as it can. So you've got the new deductions for tips and overtime and seniors that they're trying to push out the door. And so they've made it a real priority to intake returns, get refunds out quickly, and answer the phones this year. And that's – the phone numbers are down a little bit, but they're not like giant lines like we've seen in some prior years.

4:59And refunds are going out. The biggest hitch has been on essentially paper checks. The administration is trying to phase out paper checks. So if you're filing on paper or trying to get a paper check back, there are some real delays there. But they've really made some priority just to get through this filing season. The enforcement side is audits, collections, that kind of thing is down significantly. And so we've seen reductions in the number of audits of high-income people, of large partnerships. And thousands of employees have left particularly on that enforcement side. And so they're down below the numbers where they were headcount-wise five or six years ago, which itself was a low point in terms of that.

5:41So I think there's almost like two stories in one. And in the long run, the service side faces challenges as well. But I think for this filing season, most of the reports we've seen are that the filing has gone relatively smoothly. Vanessa, what changes have you been tracking since President Trump came back into office, especially when it comes to staffing of IRS teams that work on tax compliance? Yeah, so about a quarter of the IRS staff was lost last year. And as you noted, three quarters of the senior leadership, a lot because of concerns about changes to taxpayer privacy and the new MOU that was between IRS and ICE.

6:21So a lot of people left over that. That MOU is now currently stopped in the courts. But on the enforcement side— And just to be clear, the MOU, it's a memorandum of understanding. That's right. Sorry. Go ahead. Tax jargon. It's unavoidable. So one of the things we've seen is both a real reduction in audits and at the same time a shifting for last summer of IRS law enforcement, you know, the criminal investigation side of things, over into ICE enforcement. So there have been a couple different ways that the enforcement has shifted. And I think that the moves of the previous administration, the Biden administration, to increase enforcement for high earners is where you've seen a lot of the losses, both because many of those people were relatively new employees, so they were probationary, and also because there's a new sort of politicization of enforcement that we're seeing moving people over to immigration enforcement.

7:17And also, we've seen some cases of efforts to change enforcement practices for either people that the administration sees as political enemies, like Harvard University, or political friends as well. Nina, we talk a lot about April 15th, but the IRS operates year-round. So what work does the agency undertake after April 15th that affects people's taxes and finances? Yeah, that's a really good point. And I'd like to say, you know, we need to talk about the morning after, you know, April 15th. And this really affects taxpayers. The IRS has a lot of filters that stop returns from being processed. And since most returns are refund returns, that means that people are waiting for action to be taken or that they need they get a letter from the IRS saying you need to come in and give us some documentation.

8:13And this is where I'll really differ with Richard about the phones. We as the center has a low income taxpayer clinic and we spend time on the phones, as do many other clinics. And when you are when taxpayers are trying to reach the IRS in order to prove their identity to release a refund, they are being either getting disconnects or being put on long wait times. And so I think some of this stuff is not transparent right now. But as time goes on and people are moved away from the phones to other tasks, that's where you'll see the real impact of the staffing cuts on the taxpayer service side. Well, there were efforts under the Biden administration to modernize the IRS.

8:57Richard, what did it try to give the agency? I mean, it tried to update the technology of the agency. I mean, in addition to adding people, what they're trying to do is make it easier so that you as a taxpayer can connect with the service online in much the same way you would deal with a bank or another financial institution online. And the same thing for the IRS person on the other side of that transaction. They have multiple systems that haven't always talked to each other very well. So the aim was to come in and make it easier that they could, you know, Jen, if you call in, that they can say, oh, here's like Jen's payment plan that she's on and here's all her returns and here's the three other times she called and here's the notices and they can see them all on one screen.

9:39And that has not been easy for them. And I don't think – my understanding is they're not all the way there yet. And the Trump administration has come in and undone a lot of the IT contracting. They basically said there was a lot of unnecessary contracts. And I think it's still a little early to have a clear window into whether that was the right move and they're heading towards something that's more technologically efficient and helpful and modern. And then there's also technological work they're doing on the enforcement side to use AI to decide which returns to audit. And so we're starting to see them move in that direction as well.

10:16You know, Vanessa, we're starting the conversation 15 months ago, essentially. But just give us a little more background on historically what's happened around investment or the lack thereof in the IRS. Yeah, so the IRS, basically as long as there's been sort of a very strong anti-tax strain in the Republican Party, so dating back at least to Reagan, the IRS has really been sort of a popular punching bag on both sides of the aisle for people who are trying to prove their anti-tax credentials. And that has basically resulted in two things. One, we've seen sort of consistent, you know, sort of decay of the agency.

10:52Their investments aren't consistently getting made that need to be made as the economy is growing, as the tax code got more complicated, you know, as the population is larger, the IRS has not been given the funds it would need to keep up with those changes. And then the other thing you see is sort of sporadic sort of pseudo-scandals that are kind of ginned up where the IRS is the point of those. So one of those was in 2004. There was accusations that the IRS had been unfairly targeting Tea Party organizations but not left-leaning organizations. There was an earlier example in the 90s during the Clinton administration about how the IRS was over-enforcing in various ways.

11:29And by and large, these scandals are not really based in fact. They're, you know, over a long period of time, the truth comes out that these are overblown stories and so forth. But in the meantime, the IRS has taken a huge hit to its sort of public persona. And one of the things that the IRS has a hard time doing is defending itself in those situations because they take taxpayer privacy so seriously, right? And so there's that long decay and then these sharp sort of attacks. And it really left the agency on its back foot. By the end of the 2010s, it was hugely understaffed. It was hugely underfunded.

12:01And it was really only after that that we started to see the kinds of reinvestments that were turning the agency around. Well, Nina, you were the national taxpayer advocate at the IRS until 2019. What's the status of that office now? Well, that office is also understaffed. They have changed their priorities. They're not accepting certain cases. I spoke earlier about refunds. Last year, they said that they were not accepting any refund cases until, you know, nine months into the year. And so that office, which is supposed to help taxpayers who are experiencing significant hardship, is very difficult to get in touch with.

12:42And that's largely a staffing issue. We have to take a short break. But before we go, we heard from Jack, a member of the 1A Tax Club. He wrote in to say, as a 26-year-old, I have never claimed anything on my taxes. I don't understand why our tax returns must be so complicated compared to other countries' tax systems. Well, coming up, technology at the IRS and why a functioning IRS counts for more than dollars and cents. We'll be right back.

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13:50At NPR, we stand for your right to be curious, because the forces shaping our world can be hard to see. Follow NPR's Planet Money wherever you get your podcasts and start seeing how the economy really works. Let's get back into our conversation. A tax day is April 15th, and many of you are sharing your experiences this season with us. Chad in Indiana texted, I didn't mind this past weekend. I work as a public middle school teacher and also have a second job. I owe about$1 ,200. Chad, thanks for that message. Richard, I want to go to you for this next question. Republicans in Congress passed their large tax cuts in spending bill last summer.

14:29It included several changes to the tax code that President Trump campaigned on. First, no tax on overtime. How is that policy filtered down to how the IRS is actually taxing overtime now? So this one, first of all, it's not no tax on overtime. It's a deduction for some overtime pay limited to the half of time and a half pay. So if you make$40 an hour and then you're getting that extra$20 increment for those overtime hours, it's the 20 that qualifies. It's capped by dollar amount. It's capped by income. And it only counts if you are required to work overtime under the Federal Fair Labor Standards.

15:07So really straightforward. So they tried to limit it. I mean, Congress was like working within fiscal constraints. I mean, the bill increased deficits, but like they really were trying to work within some fiscal constraints. And that meant they put conditions on this. And what we found so far is we had a story about this recently, that the number of people who are claiming that deduction is likely to be close to two times as many as thought. And we think some of it, maybe people just writing down whatever number, some of it may be confusion. This year, because they put this in effect for tax year 2025, employers aren't providing information about that.

15:43So, you know, normally, like for regular wages, you know, if you make$75 ,000, the IRS sends you a W—your employer sends you a W-2 that says$75 ,000. They send the IRS the same thing. You know, that's true. In the future, there'll be a box that will have qualified overtime compensation. This year, that's not the case. And so it's left a lot of employees, a lot of taxpayers on their own to figure out what that is. And, you know, we'll see how the IRS enforces that. But it's been one of those breaks that has made average refunds higher and millions, tens of millions of people are claiming it. The real question is whether they're actually claiming the right thing.

16:19There's also the president's push for no tax on tips. The agency had to write that policy into tax regulations. Nina, what's happening with that deduction this year? How are people filing to take advantage of it? Well, I think sort of what Richard said about no tax on tip overtime, or what they're calling, is the same thing with tips, is that employers are often not reporting the accurate amount. There's a lot of confusion on how to report things. The guidance says, for example, if it's added as a standard service charge, like an 18 or 20 percent service charge to a restaurant check, that's not a gratuity.

17:02And that's not part of the no tax on tips component. I did find something really interesting. I think it was last week that there was basically a news release from the IRS saying that they had created a dedicated team to look at fraud in both of these provisions. And I think that's a very subtle way of saying this may be the next, you know, big employee retention credit problem for the IRS to chase down. And these will be people that are, you know, not necessarily, you know, able to defend themselves against an IRS audit or, you know, review of some sort. We'll talk a little bit more about the options people have for filing in a moment.

17:48But Vanessa, when we're talking about fraud compared to just people not understanding the tax code, especially if you're not using an accountant or some kind of tax filing service, how often do people get caught up in just confusion about what they can actually file for or not? Yeah, I'm very worried about fraud this year and about scams this year in particular. Again, just sort of preying on people's confusions. There's been so much hype around no tax and no overtime, no tax on tips. And then it's actually, as Richard explained, this very complicated process. And so I'm very worried about both taxpayers making honest mistakes and then getting caught up in an auditing process.

18:29And then also I'm worried about the possibility that people are going to be taking advantage of that. Unscrupulous people are going to say, oh, come to me to file your taxes. I can get you this huge refund. You've heard it in the news. There's these wonderful deals that you can get. And, you know, that's really been hyped by a lot of politicians. And, you know, when people go to fraudulent preparers, it can be so costly to them. And there are also serious issues with identity theft. And, you know, the IRS is understaffed, so they're not going to be able to do the kind of law enforcement work they usually do that protects the public and protects taxpayers.

18:59I just want to mention here we did reach out to the IRS for this program. We did not receive a response, but the door remains open. We got this question from Sandra, who says, yesterday I received a scam call from someone saying they were from the IRS. Does the IRS ever call people on the phone? Nina, what can you tell us from your experience inside the agency? Well, we're hearing a number of things. We are hearing that sometimes the IRS does call people when you have actually written them and are in an appeal or something like that. But the IRS's position is we'll send you a letter first. It doesn't email.

19:34It doesn't send faxes. It doesn't send texts. If you have an online account, you can get things through that. But then you're going in and signing in. So you've verified your identity that way. So you really need to be careful. And these people are very, very clever. However, I'll say one more thing. As the National Taxpayer Advocate, we saw scams where people were sending out letters that literally looked like the letterhead of the Taxpayer Advocate Service and my signature on letters that were clearly scams saying we can help you with your refund. Just put your Social Security number in and your mother's last maiden name and everything like that.

20:13So if someone receives an IRS notice or something they think is an IRS notice about something being wrong with their return or the agency thinking the taxpayer owes money for some reason, how should they respond? What's the best way to ensure this is actually a notification from the IRS? You know, I would call the 1040 number and be prepared to wait, but get through. There's an option that you have a question about a notice. So you have whatever the communication is, and then you know that the 1040 number, 800-829-1040, is an IRS number. And a sister can look up and say, we didn't send you that, or yes, we did, and here's the issue.

20:56Well, we're hearing from many of you. Another member of the tax club writes, our federal taxes definitely increased, and we were weighed down emotionally knowing our federal taxes are going to fund a misaligned government. Another of you shared this year, I did get a big refund, but I don't expect that next year. They aren't withholding as much money. I'm concerned I'll have to pay. I want my taxes to pay for health care and education. Now, the one big beautiful bill act that included these tax cuts is expected to lower the amount of money the IRS takes in. Part of that is because taxpayers are receiving larger refunds.

21:31Now, Republicans, including President Trump, touted the size of the refunds people will get this year. Vanessa, what are we seeing so far? How big have tax refunds been on average compared to past filing seasons? Yeah, I think the people who've been writing in have given a good picture of it. I mean, we're seeing bigger refunds. Part of it is that they passed these new deductions, these new breaks, and then made them apply for the current tax year, which explains both the confusion and the larger refunds. But those are, of course, temporary. They're going to phase out in a couple of years. At least that's what the current law says.

22:06So, yeah, so I think that there are definitely people seeing larger refunds this year because of this bill, but there are also people seeing a lot of confusion and a lot of doubts about whether those refunds, if they got checked, would be accurate. Well, Richard, there's also this question of how this increase in tax refunds compares to the price spikes people are dealing with around energy, food, housing. What can you tell us? Yeah, in some ways what we're seeing is that the increases in gasoline prices and the tax refunds are kind of by order of magnitude roughly equivalent. So that you can think of it as the tax refunds getting sort of soaked up by that, or you can think of the tax refunds providing a cushion for the American consumer against these higher prices that we're seeing driven by gasoline and oil over the past couple of months.

22:55So we've definitely seen that happening. and what happens later down the line if the gasoline prices stay high or keep rising and there's not another round of tax refunds to happen. We are seeing some of this will get baked into withholding as one of the listeners said. So you'll see people's paychecks every couple of weeks will increase if you incorporate these breaks into withholding. If you don't incorporate them into your withholding, then you'll just get another big refund next year. So it's always tricky for people that a lot of people judge what their taxes are based on the refund, but that's only the sort of net amount at the end, the true up that gets you from what you paid over the course of the year, the difference between that and what you actually owe.

23:46The real way to look at it is to look at your tax return and the total tax that you're paying and your total income and try and gauge it that way. That echoes this message we got from Garrett in Rhode Island. I just got my federal return back. My salary is in the mid -$50 ,000 as a mailman. The cost of living in Rhode Island has increased a lot. I got back about$2 ,800 from the IRS and$600 from my state. The only reason I got a federal return at all was because I withheld$100 more per paycheck. Things are tight, but I would rather get overtaxed on the front end than be surprised come April. I'm curious who is benefiting most from the tax cuts that were included in this tax and spending bill.

24:30Vanessa, by your assessment, who's coming out on top? Oh, yeah, we've talked a lot about the small components that affect some amount of the regular working people. But the vast majority of the benefit of this bill went to very, very wealthy people. There are just huge new breaks, huge new changes in how income gets counted that will be an enormous boon. And by very, very wealthy, assign some dollar amounts to that because that can mean a range of things. Yeah. No, I mean really indeed very wealthy. I mean people who have millions and tens of millions and hundreds of millions and billions of dollars, they will have seen very, very large benefits this year.

25:17And often if you try to talk about them in terms of their taxable income, it's very low because the thing that they're getting is the ability to make money without it counting as taxable income in the first place. That's sort of the trick of the progressive system. The rates go up as you have more taxable income, but the people who have wages and salaries, that's taxable income. But people who are making money from their money, there are a lot of ways of making that non-taxable income. Richard, I wanted to get your thoughts as well. Yeah, I think we can separate this into two buckets. All the new things that we're talking about, the tips and overtime and expanded deduction for state and local taxes, were all things that were new.

25:57But the biggest component of the tax law that Republicans passed last year was extending the prior tax law that they passed in 2017. So there was so much that was scheduled to expire at the end of 2025 if Congress did nothing. A deduction for closely held pass-through businesses, which is a lot of both small and large businesses. Lower tax rates, higher standard deductions, higher child credits, higher estate tax thresholds. A bunch of things that help people lean sort of more upper to upper middle income, though they help people across the income spectrum. And so those things, you don't sort of feel some of those changes because it's essentially continuing what was in place from 2018 through 2025.