Lawmakers Ax $11.7 Billion in IRS Funding in Spending Plan (2)

Lawmakers are seeking to ax nearly $12 billion more in IRS funding in a bipartisan spending plan released early Tuesday.

Proposed legislation funding the Labor, Health and Human Services, Education and related agencies includes a rescission of $11.66 billion in the extra Biden-era funding from the IRS in fiscal year 2026.

Lawmakers are racing to complete spending bills to avoid a partial government shutdown when current authority runs out Jan. 30.

Republicans have been slowly clawing back the nearly $80 billion in new funding the IRS got in the Democrats’ 2022 tax-and-climate law. It was money the agency was using to modernize, go after tax cheats, and improve customer service after decades of underfunding.

As of March of last year, Congress had reduced that funding to $37.6 billion, according to an August report by the Treasury Inspector General for Tax Administration.

Another cut to the IRS’s extra cash would come as the agency manages the fallout of a reduced workforce and faces the test of a smooth tax filing season. Treasury Department leaders have said technology is meant to fill the gap for labor losses.

The latest reduction targets operations funding provided by the 2022 law. The IRS as of March 2025 had about $19.3 billion left in that account, according to that August TIGTA report.

The new cut has been expected for months after the Senate Appropriations Committee in bipartisan fashion advanced legislation last summer that included it.