Every other Tuesday, the team behind Civics 101 joins NHPR’s All Things Considered Host Julia Furukawa to talk about how our democratic institutions actually work.
There are some changes this tax season that could affect taxpayers. Here to talk about the ripple effects of the Internal Revenue Services layoffs and expiring tax cuts on our tax returns is Civics 101 Senior Producer Christina Phillips.
Transcript
The IRS cut over 6,000 jobs in February, with plans to cut 18,000 employees—that's 20% of its workforce—by May. How are those cuts going to impact taxpayers this year?
Well, this year it might make it harder to get help if you need it. There's a lot of customer service that the IRS was struggling to respond to, and the recent hirings in the IRS were helping to alleviate that. So [for] people who might need questions answered, it might be a little harder to get help.
Also, in the long term, many of the programs that are on the chopping block were focused on collecting owed taxes from some of the wealthiest Americans and businesses. So unpaid taxes make up hundreds of billions of dollars in lost revenue every year. These cuts will probably mean less audits, especially those audits that are more expensive because they're higher lift, because they're for wealthy taxpayers and businesses.
Many of the tax cuts implemented in the previous Trump administration are set to expire at the end of this year. How might this affect our taxes?
So first of all, nothing will change about your tax return until 2026. When you do your tax return in 2026, you will still have the same sort of tax policies that we have right now for everything you earned in 2025.
But if those tax cuts that are expiring go away, we'll be looking at a lower standard deduction, a child tax credit that's cut in half from $2,000 to $1,000 per child, and an income tax rate that would return to its previous levels, with the lowest rate being 12% and the highest being 39%. Business tax cuts, which were slashed down to 21% from 35%, are here to stay.
But the important thing is that Republicans in Congress are trying really hard to keep many of these expiring provisions in the new budget. In order to do that, Congress is looking to cut mandatory federal spending by $2 trillion over the decade. Most of the mandatory spending goes to Social Security, Medicare, Medicaid, veterans benefits and other social services. Many economists have said that it's virtually impossible to meet the budget goal without cutting some of these programs that across the board are pretty popular to voters.
What other changes are there this tax season that we, the taxpayer, should know about?
Well, I'll just say what I always love sharing with people: The federal government says that people under a certain income threshold should be able to file their federal tax return using tax software for free. The government contracts with companies that promise to make that software available for people who qualify for it.
This year, if you make under $84,000 and your tax return is relatively simple, you should be able to file your federal tax return for free. And I can't account for state income tax returns because some of those will cost money. But the federal return, if you want to find good, trustworthy software that isn't going to make it hard or virtually impossible for you to access free filing, you should go to irs.gov and click on the “Explore Free Filing Options” link.
