When tax season officially opens on Monday, January 26, 2026, the IRS will begin what multiple experts are calling the most challenging filing season in recent memory. The agency must process an expected 164 million individual returns with a workforce that has been reduced by 26%—a combination that has tax professionals bracing for significant delays.

"Buckle your seatbelts. This is going to be a bumpy filing season," warned Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center. It's a sentiment echoed across the tax preparation industry.

The Perfect Storm

Several factors have converged to create what may be the most strained tax season since the pandemic:

Workforce Reductions

The IRS workforce has been decimated over the past year:

  • Overall reduction: 26% fewer employees than at the start of 2025
  • IT staffing: Down 27%
  • Taxpayer Services: Down 22%, or more than 9,000 employees
  • Key filing season functions: Reduced by 17-19%

The cuts stem from Elon Musk's Department of Government Efficiency (DOGE) initiative, which targeted federal agencies for workforce reductions. Additional reductions came through budget cuts and the recent government shutdown.

The 43-Day Shutdown Hangover

The longest federal government shutdown in history, which ended earlier this month, further complicated preparations. When the shutdown began on October 1, 2025, approximately half of the remaining IRS employees were furloughed. The agency has been scrambling to catch up on delayed work ever since.

Budget Constraints

The appropriations agreement allocates $11.2 billion for the IRS for the remainder of fiscal year 2026—about 9% lower than the agency's 2025 budget of $12.3 billion. The Trump administration's initial budget request had proposed a 20% cut.

What Taxpayers Should Expect

For the majority of taxpayers who file electronically with straightforward returns, the experience may not be dramatically different. The IRS has invested heavily in electronic processing systems, and most e-filed returns are processed within 21 days.

However, certain groups face significant risks of delays:

Paper filers: Approximately 6% of taxpayers still file paper returns. With fewer workers to process physical documents, these returns may take months rather than weeks to process.

Flagged returns: Any return that requires additional review—due to errors, identity verification, or claims for certain credits—could face extended delays. With fewer employees to respond to taxpayer correspondence, refunds for flagged returns may be frozen for weeks or even months.

Those needing assistance: Call center wait times may exceed 45 minutes during peak periods. The IRS has already warned of reduced operating hours and limited appointment availability at walk-in centers.

New Complexity This Year

Adding to the challenge, the 2026 filing season introduces significant new tax provisions from the One, Big, Beautiful Bill Act that became law last July. These include:

  • No tax on tips: Workers in tipped industries can exclude tip income from federal taxation
  • No tax on overtime: Overtime pay receives special tax treatment
  • Car loan interest deduction: Up to $10,000 in interest on loans for American-made vehicles can be deducted
  • Enhanced senior deduction: Increased standard deduction for taxpayers 65 and older

A new Schedule 1-A allows taxpayers to claim these deductions, but the added complexity means more opportunities for errors—and more returns that may require manual review.

What You Can Do

Tax professionals recommend several steps to minimize the risk of delays:

File electronically: E-filed returns are processed far faster than paper returns. If you haven't already, this is the year to make the switch.

File early: Returns filed at the start of the season face less competition for processing resources. Don't wait until April.

Opt for direct deposit: Refunds delivered via direct deposit arrive faster than paper checks.

Double-check everything: Errors are the most common cause of processing delays. Review your return carefully before submitting.

Keep records: Save copies of all documents in case the IRS requests verification.

"The IRS is doing the best it can with limited resources, but taxpayers need to be realistic about what that means. If your return is anything other than completely routine, be prepared to wait."

— Enrolled agent and tax preparer

The Bigger Picture

The 2026 filing season represents a real-world test of whether the IRS can maintain acceptable service levels after significant budget and workforce cuts. The outcome will likely influence future debates about agency funding.

Supporters of the cuts argue that the IRS has been bloated and inefficient, and that technology can compensate for fewer workers. Critics counter that the agency was already understaffed relative to its workload, and that further reductions will inevitably degrade service.

For taxpayers, the philosophical debate is less important than the practical reality: this year's refund may take longer to arrive, and getting help from the IRS will be more difficult than ever. Plan accordingly.

Key Dates to Remember

  • January 26: Tax season officially opens; IRS begins accepting returns
  • January 31: Deadline for employers to send W-2 forms
  • April 15: Tax Day; deadline to file or request an extension
  • October 15: Extended filing deadline for those who requested an extension

The IRS expects the vast majority of refunds to be issued within 21 days for e-filed returns with no issues. But if your return is flagged, paper-filed, or otherwise requires human attention, prepare for the bumpiest ride in years.