IRS Woes Persist as White House Pitches Another Big Funding Bust

The perennially underfunded IRS will likely have to muddle along with even less in 2027.

President Donald Trump last week proposed cutting the tax agency’s annual funding by $1.4 billion to $9.8 billion as part of his high-level wishlist to Congress of the administration’s priorities. If enacted, it would be the lowest level of IRS funding in over a decade.

The agency, which lost about a quarter of its workforce to Elon Musk’s Department of Government Efficiency resignation incentives, is a trimmed-down version of what it was over the last four years. It’s back to a similar size during the first Trump administration.

At the agency’s height it had over 100,000 workers. The Biden administration was building up the agency to go after tax cheats, and modernize and improve customer service using the roughly $80 billion in funding from the 2022 tax-and-climate law. The extra cash from that law now sits at about $10.3 billion after the IRS started spending but later saw steep cuts from Republicans.

Technology is the Trump administration’s answer for doing less with more, though few of those promises have materialized. Filing season is also set to end in roughly a week and indications point to no major disruptions. Internally, IRS workers say otherwise.

Here’s where IRS potential annual and extra funding stands.

Trump’s $9.8 billion proposal for IRS funding in 2027 aligns with the administration’s asks from the previous year. This year’s request comes in three buckets: $3.13 billion for taxpayer services, $4.1 billion for enforcement, and $2.6 billion for technology and operations support.

The IRS in 2026 avoided the deep cuts sought by Trump and House Republicans, who wanted even less at $9.5 billion. The GOP-led Senate sought $11.8 billion and the agency ultimately received about $11.2 billion in 2026—still a drop from previous years.

IRS workload over the last decade has increased, with added mandates from Congress, most recently in a slew of new tax breaks in the GOP 2025 tax law. Tech has changed. Tax cheats are getting smarter.

Agency funding hasn’t kept up.

Republicans say they want a smaller government, can’t trust the agency, and that the IRS’s emphasis on enforcement has turned off appropriators in Congress. Democrats point to reports showing cutting enforcement encourages tax cheaters and leads to less revenue collected.

The Democrats’ 2022 law gave the agency originally $80 billion to help bring it into the 21st century. Republicans in Congress, however, reduced that funding to $26 billion and the IRS now has $10.3 billion left.

Money from that law also was used to help supplement annual funding, which often doesn’t cover normal operating expenses.