The IRS processed 139 million individual tax returns and issued over 90 million refunds during the 2026 tax season, according to a report by National Taxpayer Advocate Erin M. Collins. About 98% of returns were filed electronically, and the same percentage of refunds were delivered via direct deposit. The agency also successfully implemented changes from the One Big Beautiful Bill Act.
However, taxpayers who needed human assistance faced significant challenges, Collins noted. The IRS began 2025 with 102,000 employees but ended the year with 74,000 due to layoffs and firings led by the Department of Government Efficiency, headed by Elon Musk. Collins had previously warned that staffing cuts could create difficulties for taxpayers needing help.
Part 1: Immediate Action & Core Facts
The IRS performed better than expected in issuing refunds despite workforce reductions. However, taxpayers requiring direct assistance struggled to get help.
Part 2: Deeper Dive & Context
Staffing and Efficiency
The IRS workforce shrank from 102,000 to 74,000 in 2025, largely due to layoffs and firings. Collins noted that customer service workers who were not allowed to accept buyout offers until after the 2025 filing deadline have since left, exacerbating the issue.
Electronic Filing Success
The IRS reported that 98% of returns were filed electronically, and 98% of refunds were issued via direct deposit, streamlining the process for most taxpayers.
Policy Changes and Implementation
The One Big Beautiful Bill Act introduced major changes, which the IRS successfully implemented. Collins praised the agency's ability to adapt despite staffing challenges.
Taxpayer Advocate’s Concerns
Collins emphasized that while the IRS met expectations in processing returns, taxpayers needing human assistance faced delays and difficulties. She had warned earlier that staffing cuts would create challenges for those requiring help.
Political and Economic Context
The layoffs were part of broader government efficiency efforts led by the Department of Government Efficiency, which has faced criticism for its impact on public services.
Long-Term Implications
The IRS's ability to handle future tax seasons may depend on whether staffing levels are restored or alternative solutions are implemented to improve customer service.