What’s in the Senate proposal
Senate appropriators have unveiled a fiscal 2026 funding bill that would cut the IRS’s annual appropriation by about 4%, to roughly $11.8 billion, according to a summary of the plan first reported by Tax Notes and recapped by a national CPA firm’s tax news blog. That compares with the IRS’s current $12.3 billion base appropriation, implying a modest trim rather than a wholesale rollback. The Senate draft reportedly holds enforcement funding flat, a key difference from the House approach.
Across the Capitol, House appropriators have pushed a steeper reduction. A recent House measure would fund the IRS at about $9.5 billion for FY 2026, with the largest hit falling on enforcement (down roughly 45% from FY 2025). Those competing toplines set up a late-year negotiation over how lean the tax agency will be as the 2026 filing season approaches.
Why this matters to owner-operators and fleets
- Longer wait times and slower responses. Treasury officials have warned that broad IRS cuts tend to slow customer service and modernization efforts. For carriers and leased-on drivers, that raises the risk of delayed responses to identity verification notices, 1099-NEC mismatches, or correspondence on installment agreements.
- Potential delays in HVUT 2290 processing. Many states require current Schedule 1 proof of payment to renew tags or complete IRP registrations. If staffing and systems are constrained, paper filings and VIN corrections can take longer, increasing the value of e-filing and early renewals.
- Enforcement mix could shift. If Senate levels prevail (flat enforcement) versus deeper House cuts, audit resources are more likely to remain targeted at complex returns and large entities; sharper cuts historically push the IRS toward automated notices and away from high-complexity audits—creating more lower-dollar touchpoints for small businesses.
Context: What the Senate is cutting from
The Senate majority’s FY 2025 summary shows the IRS funded at about $12.3 billion this year, a level the new draft would trim by roughly 4%. That’s well above proposals from the administration and House Republicans earlier this year to lower IRS base funding by billions more in FY 2026.
State tax ripple effects you should watch
Separate from annual appropriations, the summer’s sweeping federal tax package—the “One Big Beautiful Bill Act”—is already rippling through state tax codes. Many states conform to parts of the federal Internal Revenue Code; several OBBBA provisions (from higher standard deductions to temporary deductions for tips, auto loan interest, or overtime premium pay) can flow into state returns depending on each state’s conformity rules. Owner-operators filing in multiple states could see changes to state taxable income, deductions, or credits as legislatures decide whether to conform, decouple, or partially adopt the federal changes.
Early state-level analysis shows potential budget impacts where full conformity is adopted, underscoring how fast rules may evolve before returns are due. Keep an eye on your home-base state—and any states where you maintain nexus or file nonresident returns—for conformity bills over the winter.
What trucking companies can do now
- File and renew early. E-file Form 2290 and obtain Schedule 1 as early as possible ahead of registration deadlines; avoid paper filings where you can.
- Tighten 1099 and payroll records. Ensure clean 1099-NEC reporting for leased drivers and contractors; reconcile EINs, addresses, and gross amounts now to reduce notice risk during a leaner service environment.
- Document deductions contemporaneously. Keep mileage logs, per diem substantiation, tolls, and fuel receipts current; preserve equipment purchase records for Section 179/bonus depreciation and interest expense calculations.
- Prepare for slower correspondence cycles. Build extra time into cash forecasts if you’re awaiting refunds or abatements on penalty notices, amended returns, or excise-tax claims.
- Monitor state conformity. Ask your advisor how your domicile and filing states are handling the new federal rules and whether partial decoupling will change your 2025–2026 state liabilities.
The road ahead
As of November 26, 2025, the Senate’s 4% trim is just a marker; House–Senate negotiations will determine final IRS funding and, with it, how quickly the agency can answer the phones, process forms, and resolve notices during the 2026 filing season. For carriers and owner-operators, the practical takeaway is the same: file early, e-file whenever possible, and don’t assume quick turnarounds on paper or correspondence-heavy issues.
Sources Consulted: Tax Notes Today Federal (as summarized by Eide Bailly Tax News & Views); U.S. Senate Appropriations Committee summaries; Bloomberg Law; Reuters; Tax Foundation; Axios.
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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.
