The federal workforce has fallen to its lowest level since 1966, with 300,000 jobs eliminated since January 20, 2025, according to federal data. As of August, 2.67 million people remain employed by the federal government, a decline from over 3 million at the start of the administration.
The reductions follow a Deferred Resignation Program estimated to save more than $20 billion annually, though some agencies have faced significant operational challenges. The Internal Revenue Service (IRS) reported a 35% drop in revenue collected from examinations, falling from $10 billion in fiscal 2024 to $6.5 billion in fiscal 2025. The IRS attributed the decline to workforce cuts, which reduced examination and collection staffing by nearly 10,000 employees.
Not all federal departments experienced equal reductions. The Departments of Education, Agriculture, and Housing and Urban Development saw the most significant cuts, while the Department of Homeland Security maintained its headcount to support immigration enforcement priorities.
The Department of Defense and intelligence agencies were not included in the Bureau of Labor Statistics count, which excludes 1.35 million active-duty military personnel and 100,000 intelligence agency employees.
The administration has proposed further IRS budget cuts for fiscal 2027, continuing a trend of reduced funding for enforcement and compliance activities. The reductions come amid broader debates over federal spending and workforce efficiency, with proponents arguing for cost savings and critics warning of diminished service capacity.
Agency-Specific Impacts
The IRS has been among the most affected agencies, with enforcement staffing reductions contributing to a decline in tax examination revenue. The agency had previously received $80 billion in funding in 2022 under the Biden administration to expand enforcement and improve taxpayer services, though those gains are now being reversed.
The Department of Education has seen substantial cuts, raising concerns about student loan servicing and grant administration. Similarly, the Department of Agriculture faces reduced capacity for food assistance programs and rural development initiatives. In contrast, the Department of Homeland Security has maintained its workforce to support immigration enforcement and border security operations.
Policy Rationale and Future Projections
The Trump administration has framed the workforce reductions as a cost-saving measure, projecting annual savings of $20 billion through programs like the Deferred Resignation Program. However, critics argue that the cuts could undermine federal operations, particularly in tax enforcement and social services.
The administration has not specified whether the reductions will continue at the same pace, though proposed IRS budget cuts for fiscal 2027 suggest further downsizing is planned. The long-term effects on federal service delivery and workforce morale remain uncertain.