Winners and losers of “Big Beautiful Bills”
These are the potential winners and losers of the tax bills that President Donald Trump called the “big beautiful bill.”
According to an internal watchdog report, the Trump administration’s 2025 cost-cutting campaign in the IRS was far too successful.
As a result, agencies may struggle throughout the 2026 tax season. Taxpayers can suffer.
The IRS lost 26% of its 102,000 workforce due to layoffs and acquisitions until early June this year amid a bigger effort by the Trump administration to reduce the federal government. The figures are listed in a June 25 report from National Taxpayer Advocate Erin Collins.
The 2025 tax season ended as “one of the most successful filing seasons in recent memory.” Collins said in a statement accompanying the report. “However, there is a risk for next year’s filing season as the IRS workforce drops by 26% and the tax law on the horizon changes dramatically. It is important that the IRS begin taking steps to prepare.”
The IRS processed 138 million returns in 2025 and issued a $86 million refund, with an average refund of $2,942.
Most tax agency critics predicted the success of the 2025 tax season. The IRS passed five commissioners in four months, Collins wrote in the report:
Changes to the Trump bill’s tax system could suck up the IRS staffing shortage
There is now a bigger challenge. The enormous legislative package approved by the Senate on July 1 includes dozens of tax cuts, tax cut extensions, and other adjustments to the tax law.
Tax Agency Information Technology Units will need to reprogram their IRS data systems to reflect these changes if they become law. However, the unit lost 27% of its staff, Collins reports.
The Taxpayer Services Unit must handle the expected deluge of calls from confused taxpayers. The unit lost 22% of its over 9,000 employees.
To avoid potential confusion, the report summarizes, “The IRS should quickly hire and train thousands of new taxpayer services employees prior to the 2026 filing season to process returns and provide timely refunds.”
Other taxpayer supporters reflect these concerns.
“We can’t make such a deep cut without damaging customer service,” said David Kass, executive director of a nonprofit, for tax impartiality. “Let’s be clear. This is a mistake by the government itself.”
Taxpayer Advocates: The IRS requires a fully functional online account
Collins made her remarks in a 75-page National Taxpayer Advocacy Goals Report to Congress. The report recommends several institutional goals. among them:
- Create a fully functional IRS online account. According to the report summary, taxpayers are currently “normally unable to file tax returns, view most notices, or respond to notifications via online accounts.” “Until recently, they were unable to pay. As a result, only about 10% of taxpayers who spent time establishing online accounts.”
- Streamlines taxpayer case management. Today, the IRS “stores taxpayer data in about 60 different case management systems that generally cannot communicate with each other,” according to the report’s summary. When a taxpayer calls, IRS representatives often search multiple systems to find data, but they wait while the taxpayer is on hold.
The Trump administration has been trying to cut thousands of jobs in the IRS this year, with support from Elon Musk’s government efficiency support, turning to money savings.
Together, the acquisition and layoffs reduced the IRS workforce from 102,113 to 75,702, according to an Advocate report.
The cuts alone would have pose a horrifying challenge to the IRS as they increase towards the 2026 tax season, according to agency observers.
But now, with Trump’s tax bill anticipated, a small number of staff may have to deal with the onslaught of taxpayer inquiries over new rules regarding overtime, tips and car loan interest.
“Now, staffing alone cuts may not have had a major impact on the filing season if everything else was held equal,” said Alex Museanu, a senior policy analyst at the Nonprofit Tax Foundation. “But it’s a risky mix of large staffing to reduce the same years as many major tax changes.”
Is the file directly in the middle?
One of the apparent victims of Cut is directly file. This is a new IRS program that allows millions of Americans who don’t have simple taxes to file returns for free.
The direct files piloted in 12 states last year expanded to 25 states in 2025. However, the program may be over now. Trump’s tax bill would enpanel the “Task Force on Direct File Exchange.”
Probably, the direct file staff knew what was coming. According to an Advocate report, in the first half of 2025, the unit reduced from 27 employees to five.
