The IRS budget would dip 37% from fiscal year 2025 to fiscal year 2026 and the number of IRS employees would drop 20% over the same period, based on the Treasury's annual Congressional Budget Justification report, according to the Journal of Accountancy. 

The number of worker would decrease to 77,728 in fiscal year 2026 versus 96,700 in the operating plan for fiscal year 2025, The Treasury Department stated  in the May 30 report released May 30. The last time the number of IRS employees dropped to less than 80,000 was prior to COVID, when roughly 74,000 worked for the tax agency in 2019.

The report put forward a total budget worth $14.2 billion for fiscal year 2026, dipping from $22.5 billion in the current-year operating plan. Most of the decrease is attributed to budgeting $2.2 billion from the Inflation Reduction Act, P.L. 117-169, in fiscal year 2026, compared with $9.3 billion in the fiscal year 2025 operating plan.

The report makes the assumption that about $59 billion of the $80 billion that the Inflation Reduction Act budgeted for the IRS will be taken out. 

The number of employees in technology and operations support, previously called operations support, would decline by 59%, dropping to 4,250 from 10,371. Enforcement employees would drop 31%, going to 22,303 from 32,350.

According to the Journal, despite the budget cuts for the agency's workers, those in taxpayer services would rise by 48% to 34,044 from 23,001 via a proposal to add 11,158 full-time employees to answer phones.

But the level of service in the 2026 filing season is projected to be 85%. This figure is slightly less than the 87% recorded for the 2025 filing season, the Treasury stated.