The IRS Is Now 25 Percent Smaller (and, Hopefully, Less Dangerous)

Most of us hate taxes, and for good reason: They’re legalized muggings to support a government that no decent person would want to fund or empower. Ideally, Congress would dramatically slash taxes, make remaining impositions less intrusive, and cut government to match. But while we got a bit of tax relief in the One Big Beautiful Bill, it did little to cut the expense or reach of the state, nor did it reform the byzantine tax code. The good news is that there are fewer tax collectors to enforce the federal government’s demands now that the Internal Revenue Service (IRS) has been reduced by a quarter.

A Smaller Tax Agency

Among the Trump administration’s promises when it took office was “to further decrease the size of the Federal Government.” The Department of Government Efficiency has been part of that effort, and while its actions have been haphazard and often disappointing, it’s scored some wins. Notably, the IRS is dramatically smaller than it was just months ago.

“Since January 2025, the IRS has taken steps to reduce the size of its workforce in compliance with the President’s executive orders and Office of Personnel Management (OPM) guidance. Employees were encouraged to take deferred resignation program (DRP) offers or other incentives to separate and avoid possible Reduction in Force (RIF) actions,” according to a July report from the Treasury Inspector General for Tax Administration. “According to IRS records, 25,386 employees separated, took a DRP offer, or used some other incentive to leave. Another 294 employees were sent termination notices due to RIF actions. These departures represent 25 percent of the IRS’s workforce and impact certain business units more than others.”

Overall, IRS staffing went from about 103,000 in February 2025 to 77,428 as of the publication of the report. Of particular interest, tax examiners who ensure compliance in federal tax returns, and revenue agents who audit individuals and businesses, saw 27 percent and 26 percent reductions, respectively, in their ranks. That’s a lot fewer federal employees pawing through people’s finances looking for rule violations to punish and money to steal for the government’s use.

A Less Capable IRS, We Hope

In April, the now supporter-funded PBS reported on declining morale at the tax agency. It also warned of “fears that Trump will weaponize the IRS against his enemies—and reward his friends.” That’s fair given the IRS’s extensive history of politicization for its own purposes and for use as a weapon by those in power. But a smaller IRS should be a less dangerous agency in anybody‘s hands.

Also in April, as workforce cuts were still underway, Renu Zaretsky of the Tax Policy Center—which generally favors a larger, more intrusive state—fretted that tax compliance could decrease, noting that “enforcement gaps and eroding IRS capacity are especially consequential in the small business sector.” Zaretsky said we might be “watching the income tax system being dismantled in real time.”

Many of us would disagree only to the extent that we see the IRS’s reduction as a good thing. If it’s less capable of harassing businesses and of mugging individuals, there’s little basis for complaint.

And most of us do resent what the IRS does. An April survey by Gallup found 59 percent of respondents describing the amount of federal income tax they pay as “too high.” That’s been the majority’s preferred answer with rare exceptions since 1956. A survey the previous month by WalletHub put the number calling their tax rate “too high” at 66 percent.

The same can be said of taxes overall. In January 2024, two-thirds of those surveyed told A.P.–NORC pollsters that federal income taxes are too high, six in 10 said the same of state sales taxes, and seven in 10 thought local property taxes are too high.

“Among those who pay federal income taxes, half say they would prefer having fewer government services if it meant reducing their bill,” elaborated Cora Lewis and Linley Sanders of the Associated Press. “One-third would keep their taxes the same in exchange for the same services, and 16% would opt to increase taxes for more services.”

So, a smaller IRS that doesn’t have the resources to scrutinize the financial details of many people’s lives should be more popular—or at least less unpopular—with the general public than the ravenous tax behemoth that has put the screws to individuals and businesses and ruined lives over decades. But that doesn’t mean cutting the IRS workforce without other major changes is the solution to our problems.

Government Spending and the Tax Code Remain Untouched

The One Big Beautiful Bill Act “does not include further structural reforms, and instead introduces many new, narrow tax breaks to the code, adding complexity and raising revenue costs,” the Tax Foundation cautions. That’s after decades of largely unheeded warnings that the tax code is too complicated and full of traps that even IRS employees don’t understand, let alone taxpayers.

In 1976, then-presidential candidate Jimmy Carter called the income tax system “a disgrace to the human race.” In 1989, The Washington Post found that IRS employees were giving wrong answers to one-third of tax questions received over a phone line established to offer filing assistance. In 2009, Deborah Schenk, an NYU professor of taxation and editor-in-chief of the Tax Law Review, warned in 2009 that the tax code is so complex, “I’d say almost everybody makes a mistake on their income tax return.” In 2020, the IRS’s own Taxpayer Advocate conceded that “the most serious problem facing taxpayers—and the IRS—is the complexity of the Internal Revenue Code (the ‘tax code’).”

That tax code is growing more—not less—byzantine as the years go by. It remains in place to ensnare unlucky taxpayers targeted by the shrunken IRS. Fewer might be tormented by the reduced agency, but all the rules and traps are still there to be invoked by remaining tax examiners and revenue agents.

And, as the tax code grows, so does the unaffordability of government. The U.S. Treasury notes “the U.S. government has spent $5.35 trillion in fiscal year 2025″ and that “compared to the federal spending of $5.03 trillion for the same period last year (Oct 2023 – Jun 2024) our federal spending has increased by $318 billion.” Worse, “the federal government has spent $1.34 trillion more than it has collected in fiscal year (FY) 2025, resulting in a national deficit,” according to the Treasury, up from $1.27 trillion for the same period last year. The debt that deficit fuels is now approaching $37 trillion.

The Tax Foundation expects the One Big Beautiful Bill to reduce increases in federal spending by about $1.1 trillion over the next decade relative to previous projections. But that leaves government growing; it will be bigger and cost more in years to come, just not as much as was originally forecast. With the gap widening between spending and revenues, deficits will rise by $3 trillion.

Don’t get me wrong: Dramatically thinning the ranks of financial inquisitors at the IRS is definitely a good thing. If that’s all we get, so be it. But behind the scenes is the larger long-term problem of an incomprehensible tax code that’s still in place to fund oversized and over-expensive government.

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Source: https://reason.com/2025/08/01/the-irs-is-now-25-percent-smaller-and-hopefully-less-dangerous/