Americans across the country are only three weeks into one of the most highly anticipated times of the year: tax season.
During this time, Americans usually enjoy a healthy boost in their finances, in the form of a tax refund, after reporting their taxable income to the federal government.
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According to the Internal Revenue Service (IRS), this year’s average tax refund is $1,928, which is 30% higher than the previous year.
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Five days after tax season kicked off on Jan. 27, the IRS received more than 13 million returns, which is 14% lower compared to the same period in 2024. Even though tax season is off to a slower-than-usual start, the IRS expects that tax return filing numbers “will catch up in the following weeks.”
The IRS makes a harsh decision
As more Americans file their taxes, the IRS is making a startling change to its workforce.
Starting Thursday, the agency will begin to lay off about 7,000 employees in Washington and across the country, according to a new report from the Associated Press.
The layoffs will affect employees in tax compliance departments who have worked at the company for about one year or less. Employees who work in these these departments are responsible for ensuring that taxpayers adhere to tax laws, correctly report their income, file their returns, pay taxes, etc.
A woman sits at her laptop with financial spreadsheets and calculator app on her phone (posed scene).
Jonas Walzberg/picture alliance via Getty Images
While the IRS has about 100,000 employees nationwide, the agency is understaffed, and mass layoffs could potentially slow down tax returns this year. Americans have until April 15 to file their taxes.
The move from the IRS comes after President Donald Trump signed an executive order on Feb. 19 that aims to shrink the size of the federal government in an effort to “enhance accountability, reduce waste, and promote innovation.”
“The government wastes billions of dollars each year on duplicative programs and frivolous expenditures that fail to align with American values or address the needs of the American people,” reads the executive order.
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Last month, Trump established the Department of Government Efficiency (DOGE), which is tasked with streamlining the federal government, eliminating unnecessary programs, and reducing bureaucratic inefficiency.
The department, which billionaire Elon Musk runs, has so far been hit with 11 lawsuits for allegedly violating the Privacy Act of 1974 by illegally accessing Americans’ personal information.
The IRS may soon undergo major changes
Trump apparently has significant plans for the IRS. According to U.S. Secretary of Commerce Howard Lutnick, Trump is planning to abolish the IRS and replace it with a service that collects revenue from tariffs, which would be used to fund the U.S. 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 Lutnick in an interview with Fox News on Feb. 19.
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Earlier this month, it was also revealed that the Trump administration is looking to deputize IRS agents to assist with immigration enforcement efforts.
In a letter sent to Treasury Secretary Scott Bessent on Feb. 7 requesting the change, Department of Homeland Security Secretary Kristi Noem said that her department will “take all appropriate action to supplement available personnel to secure the southern border and enforce the immigration laws of the United States.”
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