Talk about an unwelcome tax cut - DOGE restructuring saw IRS lose 40% of its IT workforce in 2025
Summary
In 2025, the IRS faced significant IT and executive staff losses, compelling the agency to rely on AI and cross-functional teams to oversee essential filing processes, highlighting the challenges of maintaining efficiency in a changing workforce landscape.
Key Insights
What is DOGE and why did it lead to IRS workforce cuts?
DOGE stands for the Department of Government Efficiency, an initiative that conducted a sweeping restructuring of federal agencies in 2025. The IRS lost approximately 40% of its IT workforce and nearly 80% of its senior technology leadership during this restructuring effort, which was part of broader workforce reduction plans across the federal government. The administration indicated intentions to cut the IRS workforce by up to 50% through layoffs, attrition, and incentivized buyouts, with the stated goal of increasing efficiency and effectiveness.
How did the IT workforce losses affect the IRS's ability to process tax returns and implement system updates?
The IT workforce reductions created significant modernization strain on the agency. The IRS needed IT employees to reprogram processing systems to reflect changes in tax law and implement inflation adjustments ahead of filing seasons. To address immediate tax season demands, approximately 1,000 tech specialists were reassigned from modernization work to deliver frontline services, raising internal concerns about whether modernization priorities could remain on schedule. Additionally, about 8,300 workers responsible for filing functions like returns processing and updating computer systems were lost, including 16% of the IT workforce. In response to these challenges, the IRS introduced AI tools into internal workflows to assist employees with process efficiency and digital return handling.