What Would a 2026 Government Shutdown Do to the IRS?

sorry we're closed sign hanging on a glass door

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As has happened numerous times in recent years, the mere possibility of a government shutdown spotlights several federal agencies, including the IRS, and raises questions about which services might be affected.

The federal government shut down on October 1, 2025, and remained shuttered for the longest period in U.S. history: 43 days. That happened after Congress missed a September 30 funding deadline.

The shutdown impacted numerous individuals and federal agencies, with the IRS seeing its services reduced after an initial contingency period.

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In early 2026, President Donald Trump told Fox News that he believed the federal government would “probably” shut down at the end of January if Congress didn’t reach a deal. But congressional leaders passed a 'minibus' spending package to avert a January 30 shutdown, though part of the deal is still being negotiated.

Following the January 23 shooting of Alex Pretti by federal agents in Minneapolis, Senate Democrats pledged to block the package because it included funding for the Department of Homeland Security (DHS). IRS funding initially tied to the same legislative bundle has since been approved.

But with the 2026 tax season underway, the IRS was already in the news because of significant changes in its operations, funding, staffing, and leadership.

But some wonder: How would a government shutdown impact the IRS and your taxes?

IRS tax season concerns

Under the Biden administration, the IRS had been cracking down on fraud and tax scams. The tax agency also wanted to hire 3,700 new agents to audit complex returns, though, as Kiplinger reported, the agency hit some roadblocks partly due to a lack of interest in the accounting field.

In addition to ramped-up enforcement efforts, the IRS had touted gains including reduced processing times, faster tax refunds, shorter wait times for taxpayer phone assistance and improvements with paperless processing.

However, in the past year, the tax agency has faced priority shifts and chaos.

There have now been seven acting IRS commissioners in just the first eight months of Trump's second term. Treasury Secretary Scott Bessent now serves as IRS Commissioner, while Frank Bisignano of the Social Security Administration simultaneously holds the newly created position of "IRS CEO."

The tax agency is also grappling with a revolving door of other senior officials, funding cuts, and significant workforce reductions that could impact its ability to carry out customer service responsibilities and implement Trump's new tax bill. initiatives.

For example, the IRS is working through 2026 with significantly less funding than in previous years:

A tentative bipartisan funding agreement would reduce IRS appropriations for FY26 by about 9 % compared with FY25 levels.
Other budget reports show the IRS’s total budget could be down as much as $8 billion to $10 billion from prior plans — largely because supplemental funding from the Inflation Reduction Act was rescinded over time.

These cuts have implications for operations, enforcement, and customer service levels.

Partial Government shutdown 2026

Likelihood of a 2026 shutdown:

January 2026. January 2026 calendar page. January 2026 calendar on desk, theme of New Year resolutions and a fresh start, planning schedule for the beginning of the year.

As of late January, Congress averted an early 2026 shutdown.

Most of a bipartisan “minibus” funding package has cleared hurdles in Congress.
Still, differences remain on key spending priorities involving Homeland Security.

Worthy of note: The last time the government shut down was following the September 30, 2025, deadline. That historic shutdown lasted 43 days until mid-November under a stopgap bill approved first in the U.S. Senate.

As Kiplinger has reported, at that time, Democrats were fighting to repeal nearly $1 trillion in GOP Medicaid cuts that would reduce health care coverage for millions, including older adults, children and people with disabilities. They also want to extend enhanced Affordable Care Act premium tax credits to keep health insurance affordable.

Some policy analysts and organizations argued that the proposed Medicaid cuts in Trump's 2025 tax and spending bill will force states to reduce benefits, jeopardize hospitals, and increase the uninsured population in the U.S. by more than 10 million.

Meanwhile, Trump and Republicans wanted a "clean" continuing resolution.

Still, at the time, the Trump administration directed federal agencies to prepare for potential large-scale, permanent layoffs of federal employees during the shutdown. (That was a break from past shutdowns, which usually involved temporary furloughs.)

What happens when the government shuts down?

Normally, during a government shutdown, most federal agencies and workers experience some impact. All "nonessential" work is forced to stop.

However, federal agencies have backup plans, and essential services continue to function — at varying levels. For example, critical services such as Social Security, Medicare, and Medicaid payments continue.

Anytime the federal government shuts down, significant impacts ripple throughout the U.S., affecting people across the U.S. in different ways.

National Treasury Employees Union President Doreen Greenwald has emphasized in the face of previous shutdown threats, that “a government shutdown is not a harmless, D.C. drama. Federal employees in every American community will lose income, through no fault of their own and, in many cases, they will be locked out of doing the work they were hired to do for the American people,” Greenwald stated in a release.

NTEU represents federal workers in 35 departments and agencies.

Does the IRS close during a shutdown?

Initially, it was assumed that the IRS would function as usual during a government shutdown, at least for some period, as its operations could be sustained through IRA funding. (That held for the first 5 business days of the 2025 shutdown.)

On September 29, 2025, the U.S. Treasury Department released an updated fiscal year 2026 Internal Revenue Service contingency plan. Under that plan:

Most core tax administration activities wouldn't stop, mainly due to funding from the Inflation Reduction Act (IRA) passed during the Biden administration.
Nearly 74,300 IRS employees would initially remain on the job, according to the plan.
Most services, authorized and funded by the IRA plan, would continue for at least five days from the shutdown date.

Note: After about day five of the 2025 shutdown, half of the approximately 74,000 employees were furloughed as most IRS operations ceased. While e-filing and payments continued, refunds, in-person and telephone assistance, audits, appeals, and paper processing were delayed or temporarily suspended.

Some industry experts believe those delays could be felt in the upcoming 2026 tax filing season, since a backlog may persist.

If a 2026 shutdown happens (the federal government has never shut down during tax season):

Expect service delays, especially for refunds and customer assistance
Processing backlogs might extend well into mid-2026
Tax deadlines would most likely remain in place
IRS employees could be furloughed or working under contingency status without pay until funding resumes.

Shutdown 2026 bottom line

As of now, the IRS remains active but budget-strained.

IRS officials are generally signaling an ability to operate smoothly during tax season.

As always, stay informed about any potential impacts on your fax filing process or communications from the IRS.

Note: This story has been updated to reflect recent developments.

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Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.