WASHINGTON, DC – APRIL 15: The Internal Revenue Service (IRS) building stands on April 15, 2019 in Washington, DC. (Photo by Zach Gibson/Getty Images)
Getty Images
The IRS workforce dropped from 103,000 employees in January 2025 to approximately 77,000 in May 2025 (a 25% reduction). Those numbers, which have been previously reported, have now been confirmed by the Treasury Inspector General for Tax Administration (TIGTA).
According to IRS records, more than 25,000 employees either separated, accepted a deferred resignation program offer, or took some other incentive to leave. These departures represent 25% of the IRS’s workforce—and some job positions were impacted more than others. For example, approximately 27% of tax examiners (they review and process tax returns) and 26% of revenue agents (they conduct audits) left the agency.
Background
Beginning in January 2025, the IRS began to take steps to reduce the size of its workforce. This was the result of executive orders issued by President Donald Trump and subsequent guidance from the Office of Personnel Management (OPM). While the President has repeatedly called for significant reductions in the size and scope of the federal government workforce, the tax agency has been a particular target.
In February 2025, the Internal Revenue Service had approximately 103,000 employees. By March, more than 11,400 of those workers had received termination notices as probationary employees or voluntarily resigned under the so-called “Fork in the Road” or Deferred Resignation Program (DRP) pushed by the Department of Government Efficiency (DOGE).
Depending on their circumstance, IRS employees could be eligible for one of three Treasury incentive offerings: (1) Treasury Deferred Resignation Program; (2) Treasury Deferred Resignation Program and Voluntary Early Retirement Authority ; or (3) Voluntary Separation Incentive Payment.
Treasury Deferred Resignation Program (TDRP version 1)
The deferred resignation program allowed federal employees to resign but retain all pay and benefits through September 30, 2025, or later if the employee’s retirement date was between October 1 and December 31, 2025.
Employees who were working from home and accepted this offer were also exempted from any return-to-office requirements. Employees had until February 6 to opt into the program.
The IRS subsequently recalled some of these resigned workers to work, noting that specific, critical tax return filing season positions would be exempt from the DRP until May 15, 2025. Those who had previously accepted the offer and stopped working but fell within the exception were advised they would be told when to return to work.
As of May 2025, 4,575 IRS employees were approved for the program. These employees are on administrative leave with pay and benefits until their separation—in other words, the government has been paying these employees to not work.
Treasury Deferred Resignation Program (TDRP and VERA)
In April 2025, the IRS offered a second DRP to its employees. This version also included paid leave and benefits through September 30, 2025.
Employees were also offered the opportunity to claim an “early out” retirement. Under the Voluntary Early Retirement Authority (VERA) program, the age and service requirements for retirement were temporarily lowered to increase the number of employees who are eligible for retirement. Employees taking the VERA were required to officially separate under the TDRP.
Over 23,000 employees applied for the TDRP. TIGTA has confirmed that 17,071 employees were approved.
Voluntary Separation Incentive Payment (VSIP)
The Voluntary Separation Incentive Payment (VSIP) was widely referred to as a “buyout.” Under the VSIP, agencies can offer employees lump-sum payments up to $25,000 (or the employee’s severance pay amount, whichever is less) as an incentive to retire or resign.
TIGTA has confirmed that 776 employees were approved for the VSIP.
Probationary Employees
In January 2025, the IRS, like other federal agencies, was asked to identify all employees on probationary periods. While probationary employees are often recent hires (meaning within the last one to two years), they don’t have to be—those who have been serving for years but were recently moved or promoted into a new position also qualify as probationary.
The IRS subsequently fired approximately 7,000 probationary employees in response to an executive order signed by President Trump on February 11, 2025. Following the order, the Office of Personnel Management advised various federal agencies, including the Department of the Treasury (which includes the IRS), to fire non-essential probationary employees.
Several legal challenges followed, and in March, U.S. District Court Judge William Alsup for the Northern District of California ordered six agencies, including the Treasury Department, to rehire the employees. In his ruling, Alsup said the federal government was required to follow normal reduction in force (RIF) rules. The government appealed the ruling—that case is currently pending in the Ninth Circuit Court of Appeals.
In the meantime, the matter was escalated to the U.S. Supreme Court, which paused Alsup’s order on administrative grounds. The unsigned Supreme Court order indicated that the group of unions and non-profit groups lacked standing to sue. Standing is a legal term that refers to your right to bring a lawsuit or have a court hear your case—to be heard, you typically have to show that another party has harmed you and that the only fix for that harm can be found in court. The idea is to ensure that matters that end up in court aren’t frivolous and are raised by the right parties. The Supreme Court’s order does not mean that it found the firings lawful, just that the wrong parties raised the issue in court.
In May 2025, IRS and Treasury decided to return all probationary employees to full work status by May 23, 2025.
However, in July 2025, the U.S. Supreme Court lifted the federal court’s prohibition on covered agencies implementing Agency RIF and Reorganization Plans and issuing or executing RIF notices. According to TIGTA, it is unclear whether any terminated probationary employees called back to work will be subject to a large-scale RIF.
Reduction in Force Actions and Administrative Leave
In February 2025, the President signed an executive order that advised federal agencies to begin preparations to initiate large-scale RIFs.
In April 2025, the IRS began implementing a RIF that resulted in involuntary staffing cuts across multiple offices and job categories. As of May 2025, 294 employees in three offices (Office of Civil Rights and Compliance, Taxpayer Experience Office and Taxpayer Service’s Office of Equity, Diversity and Inclusion) received RIF notices. However, a district judge placed an injunction on the removal of these employees.
In addition, in March 2025, 48 senior Information Technology employees were placed on administrative leave. Of the 48 employees, 26 took the Treasury incentive offerings, while 22 remain on administrative leave.
Other Separations
TIGTA also identified an additional 3,093 employees classified as other separations—such as resignations, retirements, and terminations—since January 2025.
According to the IRS, 752 of these are probationary employees who received termination notices and decided to resign. These employees did not participate in the DRP, TDRP, or other offerings from the IRS.
Business Units
Business units at the IRS were impacted at different rates.
IRS employee reductions, by business unit.
Kelly Phillips Erb
The top six business units affected by the cuts are:
- Small Business/Self Employed (SB/SE) helps small business and self-employed taxpayers understand and meet their tax obligations. SB/SE reported a 35% reduction.
- The Human Capital Office (HCO) supports IRS employees with Human Resource topics. HCO reported a 28% reduction.
- Information Technology (IT) supports IRS employees by delivering IT services and solutions. IT reported a 25% reduction.
- Tax Exempt & Government Entities (TE/GE) helps taxpayers with pension plans, exempt organizations, and government entities comply with tax laws. TE/GE reported a 25% reduction.
- Taxpayer Services (TS) helps taxpayers understand and comply with tax laws. TS reported a 20% reduction.
- Large Business and International (LB&I) helps corporations and partnerships with assets greater than $10 million to comply with tax laws, including emerging international issues. LB&I reported a 19% reduction.
Geographical Impact
Every state, including the District of Columbia and Puerto Rico, has been impacted by the reductions.
To date, TIGTA reports that California, Georgia, New York, Texas, and Utah have the highest numbers of anticipated employee separations. Delaware, Idaho, Iowa, Maine, and Mississippi have the highest percentage of anticipated employee separations compared to the IRS workforce in those states.
Hiring Freeze
In addition to mandatory reductions, IRS employee levels will also be impacted by attrition, including those employees opting for retirement. Importantly, they will not be replaced. As part of his January 20 executive order, Trump issued a hiring freeze that was intended to be temporary, with one exception—the IRS. While the freeze was slated to expire for other federal government agencies after 90 days, the hiring freeze for the IRS will remain in place until “it is in the national interest to lift the freeze.”
In her recent report to Congress, the National Taxpayer Advocate recommended that the hiring freeze be lifted so that the IRS can hire essential filing season staff to meet taxpayer needs next year. This needs to happen by the end of summer, she says, to allow time for onboarding and training by January.
That will be particularly important following recent changes in the tax law, thanks to the One Big Beautiful Bill Act, including new, temporary deductions for seniors, tipped workers, employees who work overtime, and taxpayers who buy new cars.
In addition to getting its employees up to speed on those issues, IRS has been tasked with issuing guidance, including new withholding tables. It’s also likely the case that Forms W-2 and 1040 will need a redesign—and IRS systems will have to follow suit. Getting all of that together before the filing season, especially with a reduced workforce, will be a challenge.
A successful filing season, Collins wrote in her report, “is not only an IRS imperative but also a national one.”
About TIGTA
TIGTA was established in January 1999 by the IRS Restructuring and Reform Act of 1998 to provide independent oversight of IRS activities. Today, TIGTA provides audit, investigative, and evaluation services to promote integrity, efficiency, and economy in the administration of the nation’s tax system. While TIGTA sits organizationally within the Department of the Treasury and reports to the Secretary of the Treasury and to Congress, the agency is considered to be independent.
Source: https://www.forbes.com/sites/kellyphillipserb/2025/07/23/government-watchdog-confirms-mass-exodus-of-irs-employees-more-cuts-are-expected/