The IRS opened the 2026 federal tax filing season on January 26. The agency said it expects to process about 164 million individual returns ahead of the April 15 deadline. The season begins as the IRS implements retroactive tax changes under the One Big Beautiful Bill Act and operates with fewer staff and reduced modernization funding.
The IRS is administering new provisions from the One Big Beautiful Bill Act, which was signed into law in July 2025. The agency is also working with a smaller workforce than at the start of 2025 and with less funding than originally planned for technology upgrades and related programs.
“The IRS workforce remains vigilant,” said Frank Bisignano, who was named to the agency’s newly created CEO role. “Our information systems have been updated to incorporate the new tax laws and are ready to efficiently process taxpayer returns.”
Changes Under the One Big Beautiful Bill Act
President Donald Trump signed the One Big Beautiful Bill Act on July 4, 2025. Several provisions were made retroactively effective as of January 1, 2025. As a result, taxpayers filing 2025 returns in early 2026 may be able to claim deductions and credits tied to rules that were not in effect during the 2025 tax year.
The law increased the standard deduction. The article’s estimates place the associated tax savings between $75 and $278 for single filers and between $150 and $555 for married couples filing jointly, depending on bracket.
The legislation also expanded the Child Tax Credit and created a $6,000 deduction for taxpayers age 65 and older, under the article’s description. It raised the cap on the state and local tax deduction above the $10,000 limit that applied from 2018 through 2024.
The law added new deductions tied to tips, overtime pay, and auto loan interest. The IRS introduced Schedule 1-A for these deductions. The agency is still finalizing detailed rules for how taxpayers calculate and claim them.
Employer Reporting and Documentation
Some employers may not have updated payroll systems to provide the detail workers need to support claims for the new deductions. The IRS has provided transitional relief for businesses that are adjusting their reporting processes.
The Bipartisan Policy Center raised questions about how complete employer reporting will be for tips and overtime and how taxpayers will calculate eligible amounts if reporting is incomplete. In the article’s example, overtime reporting could include all overtime pay rather than only the premium portion tied to time-and-a-half pay.
The IRS also has to review claims in cases where employer data does not include the details needed for straightforward verification.
Funding and Staffing
The IRS began a modernization effort in 2022 supported by $79 billion in supplemental funding under the Inflation Reduction Act. The article says three laws passed between 2023 and 2025 rescinded $42 billion of that funding. It also states the IRS spent $16 billion through September 2025 and had $21 billion remaining from what officials expected.
A bipartisan agreement released in January proposed cutting fiscal year 2026 IRS funding by 9%, or $1.1 billion, compared with 2025 levels. The IRS is operating under a continuing resolution as Congress debates full-year appropriations.
The Treasury Inspector General for Tax Administration said in an October 2025 report that completing IT modernization projects, providing service, and enforcing tax laws with a reduced workforce and budget “will be challenging for the IRS,” according to the article.
The article also reports the IRS lost about 25% of its workforce between January and May 2025, with many departures tied to the Deferred Resignation Program.
Leadership Changes
The IRS had seven individuals serve as commissioner during 2025, according to the article. Five served in an acting capacity.
The article says Treasury Secretary Scott Bessent has served as acting IRS commissioner since August 2025. It also reports that the administration created a CEO position, now held by Frank Bisignano, to help manage operations.
“President Trump is committed to the taxpayers,” Bessent said in a statement. “Treasury and IRS were diligently preparing to update forms and processes. I am confident in our ability to deliver results and drive growth.”
Refund Data and Timing
The retroactive provisions in the One Big Beautiful Bill Act may affect refund amounts and timing for some taxpayers. Refund patterns can also change during the season because the IRS is not permitted to issue certain refunds, including those tied to the Earned Income Tax Credit, until later in the filing period.
The IRS typically releases aggregate refund data and average refund amounts in early February. Those figures are often tracked by policymakers and analysts as an early indicator of filing season trends.
Budget Context
Higher refunds can affect federal revenue in the year refunds are issued. The article states the federal deficit is projected to exceed $2 trillion in fiscal year 2026 and attributes nearly $500 billion of that total to tax provisions in the One Big Beautiful Bill Act.
IRS Guidance for Filing
The IRS recommends electronic filing and direct deposit. The agency is also moving away from paper checks as electronic payments become the standard method, according to the article.
Taxpayers can use an IRS Online Account to track refund status after e-filing. The IRS Free File program opened January 9, which allows some taxpayers to prepare returns before the official filing season start.
The article also describes a pilot program called Trump Accounts that provides $1,000 contributions for U.S. citizen children born between 2025 and 2028. Eligibility depends on program requirements.
Processing and Service Considerations
The IRS is managing return processing while continuing fraud screening and error review. The article notes that reduced staffing may affect phone wait times and processing timelines for returns that require manual handling, such as amended returns.
A lapse in appropriations could also affect IRS operations during the filing season. The article notes that another shutdown in February 2026 could affect customer service, enforcement, and other functions.
Oversight bodies, including the Treasury Inspector General for Tax Administration, track filing season performance through measures such as processing speed, backlog levels, service metrics, and error detection.