With the 2024/2025 fiscal year coming to a close and the tax deadline passing, many taxpayers are anxiously waiting for their tax credits and rebates. However, some major changes are coming for the IRS, which are expected to impact these expected rebates for taxpayers. The IRS has recently been undergoing significant changes, including a recent reduction in workforce size upon the recommendation of the new Department of Government Efficiency (DOGE) appointed by the Trump Administration.
Who can expect a tax rebate?
It is important to remember that just because you file your taxes, it does not immediately guarantee tax rebates. A tax rebate occurs when you have overpaid on your tax liability, which you owe the government. This generally happens for employees whose employer automatically deducts their taxes from their income and who may then end up overpaying on what they owe the IRS. It is also usually relevant for individuals who file for tax rebates and credits, such as the Child Tax Credit and the Additional Child Tax Credit.
Even individuals who do not earn enough money to reach the income threshold that makes them liable to pay tax are often issued a refund from the IRS, as they are still often eligible to receive tax credits and rebates. This is because many of these credits are specifically targeted at low-income households. If you e-file your tax returns, you can check to see your refund status generally within 48 hours of filing through the IRS website.
Major changes this month could affect your refund
Recently, the IRS workforce has been dramatically cut by DOGE, headed by Tesla CEO Elon Musk. DOGE was brought on board by the Trump Administration as an external body to advise on how to decrease unnecessary government spending. The program has an ambitious goal of saving two trillion dollars worth of taxpayer money before DOGE’s contract is set to expire in July of next year. According to the IRS official website page, IRS Budget and Workforce, the IRS’s actual expenditures for the 2023 fiscal year were just over $16.1 billion for overall operations.
In February, 7,000 employees were fired by the IRS. In addition, the IRS is considering halving its workforce of 90,000 people, including shrinking the IRS’s Taxpayer Advocate Service branch by approximately 20%. The IRS’s Direct File department is also set to be reduced by approximately 30%. While some employees who were laid off in February have been called back to work a court order, the anticipated workforce size reduction for the IRS is set to delay the tax rebates for this month.
The unsteady future of the IRS
The significantly reduced workforce size of the IRS is not only related to DOGE’s federal spending audit. It also informs part of a broader plan of President Donald Trump regarding his vision to get rid of the IRS completely. Instead, taxes would be collected through tariffs to fund the federal government.
“Donald Trump announced the External Revenue Service, and his goal is very simple: to abolish the Internal Revenue Service and let all the outsiders pay,” said U.S. Secretary of Commerce Howard Lutnick in an interview with Fox News.
More changes that could soon be expected from the IRS include the abolishment of the free IRS Direct Filing program. While the program was kept in place for this tax year, it is uncertain if it will still be available to taxpayers come next year’s tax season. The program was piloted in 2024 and was expanded to include access to half the nation’s states. Opposing lawmakers for the program argue that free filing services already exist, and that the Direct Filing program is a waste of money. However, these alternative free services are not as simple as the Direct File program.
