A House Appropriations subcommittee advanced a bill late Monday that would provide $9.5 billion for the IRS in fiscal year 2026 — a reduction of more than 20% from the current funding level of $12.3 billion.
The Financial Services and General Government Subcommittee advanced the measure that would cut $2.8 billion from the current IRS budget on a 9-6 party-line vote.
Overall, the FSGG bill would provide $23.3 billion in funding in fiscal year 2026, $410 million less than in 2025, covering a wide variety of agencies, including the Department of the Treasury, the executive office, the judiciary, and the Small Business Administration.
“Taxpayers demand legislation that responsibly addresses critical needs while systematically eliminating waste,” House Appropriations Committee Chair Tom Cole, an Oklahoma Republican, said this week. “This measure exemplifies that approach and further demonstrates steady and consistent progress in cutting federal spending.”
The largest cut at the IRS would focus on enforcement, which would see funding fall from $5.4 billion in fiscal 2025 to $3 billion.
Democrats blasted the plan, saying the cuts will benefit cheaters and make it harder to collect money owed to the IRS.
“On the heels of a massive $4.5 trillion giveaway to billionaires and corporations in the Big Ugly Bill, this bill guts the Internal Revenue Service,” said Appropriations Committee Ranking Member Rosa DeLauro. “An underfunded IRS means slower processing of Americans’ tax returns – and delays to crucial benefits like the Child Tax Credit – but it also means that those with the most resources, like billionaires and powerful corporations, can escape scrutiny, and avoid paying taxes, when the IRS cannot afford to ensure they are meeting their obligations.”
DeLauro noted that money spent on tax audits more than pays for itself, with average audits producing about $2 in revenue for every dollar spent, and audits of the wealthiest households producing $6 for every dollar spent.
The bottom line: The Republican funding bill marks another moment in the party’s effort to shrink the IRS. Democrats provided an additional $80 billion over 10 years for the IRS through the Inflation Reduction Act of 2022, with the goal of modernizing and strengthening the tax agency, but Republicans have steadily chipped away at that funding. If this House bill becomes law, it would reduce IRS funding to its lowest level in more than 20 years.