Could the IRS Hiring Freeze Delay Tax Refunds? What We Know

The IRS is locked in a hiring freeze after President Donald Trump issued an executive order to stop all federal hiring activities and mandated federal workers' return to the office. The freeze has raised concerns that this could cause delays in receiving tax refunds.

Why It Matters

Americans typically expect to see their tax refunds within a few weeks after submitting their returns. However, if the IRS experiences staffing shortages, the ability to process the returns as quickly as in previous years could be in jeopardy.

Pictured is the IRS headquarters in Washington, D.C. J. David Ake/Getty Images

What To Know

There's no current end date for the IRS hiring freeze. That decision will ultimately be left to newly appointed Treasury Secretary Scott Bessent.

The freeze also means that everyone hired by the IRS with a start date after February 8 will see the job offer revoked.

How Trump's Executive Order Could Affect Tax Refunds

Because of the freeze, the agency could face staffing shortages and lower customer service capabilities, potentially affecting the timing of tax refunds.

The IRS expects to receive 140 million individual tax returns this year, and those who file later could face a longer wait for their tax refunds to arrive.

The average refund will still likely be around $3,100, but the timeline of when that money arrives could change this year as the IRS deals with staffing shortages resulting from the hiring freeze and the return to the office mandate.

IRS Refund Schedule

Most tax refunds are issued within 21 days of filing, but the exact timing could vary depending on if you file electronically or by mail or your return needs corrections.

What Is the Standard Deduction for the 2024 Year?

The standard deduction is now $29,200 for married couples filing together, up $1,500 from tax year 2023. For single filers, the standard deduction jumped $750 to $14,600.

What Is the Deadline to File?

While the tax filing system opened up in January, taxpayers still have a few months to get their tax returns filed on time.

The final deadline for filing is April 15, unless you have a federally approved exemption.

What People Are Saying

Former IRS Commissioner Charles Rettig wrote on LinkedIn: "Every facet of IRS operations will be significantly impacted by the current hiring freeze. Fortunately, IRS employees are resilient and have considerable experience with hiring freeze operations."

Michael Ryan, founder of MichaelRyanMoney.com, told Newsweek: "The IRS hiring freeze creates a perfect storm for tax season delays, particularly for complex returns requiring manual review. While over 90 percent of refunds are still processed automatically, the freeze hamstrings the IRS's ability to handle exceptions and maintain service levels."

Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek: "The hiring freeze may cause some delays, but I don't anticipate any major issues at this time. If your tax refund is delayed, the IRS starts paying you interest after 45 days from the tax filing deadline or 30 days after receiving an amended return. The interest rate is the federal funds rate plus 3 percent, so if your refund takes longer than expected, at least you'll earn a little extra—though, of course, it's taxable."

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek: "Even with the current hiring freeze, the IRS has expanded its employee base in recent years under the Biden administration, meaning that in the short term they should still have more than enough staff to handle this tax season and lessen the risk of any delay in the processing of refunds."

He continued: "However, the end of teleworking under President Trump's executive order could signal some IRS employees leaving or retiring early if eligible. Whether or not that will be a significant amount remains to be seen, but it's fair to say the future of the IRS is going to be dependent on a more limited staff, and that could add time to the processing of returns. For the 2025 tax season, though, disruption doesn't seem likely."

Eric Green, partner at Green & Sklarz and founder of the Tax Rep Network, told Newsweek: "The reduction in workforce will absolutely have an issue on not only refunds but everything going on in front of the IRS. I already have two appeals officers who called and told us they are taking the retirement package and walking out the door. Fewer folks to help taxpayers, or get anything resolved, is going to be a huge problem, especially for taxpayers trying to work things out on their own. Taxpayers will, for a while, pay the price for this, as the ability to get to a human being at the IRS or get anything done that is not automated will be an issue."

What Happens Next

To lessen their chances of a refund delay, taxpayers should file early and ensure there are no errors in their first submission before any returns backlog hits.

Ryan said the hiring freeze could be especially hard on manual reviews of returns with discrepancies, as well as resolution of identity theft cases. Customer service response times will also be affected, with the processing of amended returns likely to be backed up.

"The irony is that this freeze comes just as the IRS was finally catching up from pandemic-era backlogs. Like taking the engine out of a car just as it's picking up speed," Ryan said.