Republican lawmakers aim to cut the IRS budget and end free online tax filing system.
Republican Lawmakers Propose IRS Budget Cuts and Free Tax Filing System Elimination
Republican lawmakers in the House are proposing significant cuts to the IRS budget and the elimination of the recently established free online tax filing system. The House Appropriations Committee’s latest bill aims to restrict funds for developing government-run tax preparation software and reduce IRS funding for 2025 by $2.2 billion particularly targeting enforcement funding, according to the report of The Hill.
Chair of the Subcommittee, Rep. Dave Joyce argues the bill aims to protect hardworking Americans from unfair IRS targeting. Democrats including Senate Finance Committee chair Ron Wyden and House Appropriations Committee ranking member Rep. Rosa Delauro criticize the cuts, highlighting concerns about limiting taxpayer options and including numerous policy riders in the proposal.
(photo: Brookings Institution)
IRS Budget Cuts Follow Recent Funding Increases
These budget cuts follow an $80 billion funding increase for the IRS in the 2022 Inflation Reduction Act (IRA), which Republicans have been gradually reducing through annual appropriations cuts. Last year, both parties agreed to trim $20 billion from IRA funding to avoid a default on U.S. debt, resulting in a $275 million cut for the IRS in fiscal year 2023.
Complicating matters further, a debt ceiling agreement last year immediately reduced IRA funding by $1.4 billion, with plans to reclaim $10 billion each in fiscal years 2024 and 2025. This agreement was later updated to withdraw the entire $20 billion in the current fiscal year. By the end of last year, only a small portion of IRA funding had been used with minimal allocations to enforcement.
Republicans previously attempted to eliminate the IRS’s free online filing program upon regaining House control, but Senate Democrats blocked the move highlighting the ongoing partisan disputes over tax policy and IRS funding.
