Congressional appropriators are seeking less aggressive budget cuts for the IRS than what the Trump administration has proposed.
Members of the House and Senate appropriations committees, in the latest package of spending bills for fiscal 2026, are also renewing efforts to shrink federal office space.
Funding for the State Department remains relatively unchanged, despite a massive reorganization carried out last year.
Meanwhile, lawmakers want agencies to use artificial intelligence tools to speed up the delivery of public-facing benefits and services.
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Here are a few highlights from the FY 2026 spending bills on financial services and general government, as well as national security and the State Department.
Less dramatic cuts for the IRS
The spending package still includes budget cuts for the IRS, but less severe cuts than what the Trump administration and House Republicans proposed.
The minibus would give the IRS an $11.2 billion budget for the rest of fiscal 2026 — a $1.1 billion, or 9% cut from current spending levels. This would be the fourth consecutive year the IRS has seen spending cuts or a flat budget.
Republican appropriators said the spending package “restrains the IRS,” while investing more funds in public-facing taxpayer services.
IRS would spend $3 billion on taxpayer services — about $256 million above current spending levels. But its enforcement budget would shrink to $5 billion — about a $439 million cut compared to current levels.
The Trump administration proposed a $9.8 billion annual budget for the agency — more than a 20% spending cut from current spending levels.
In recent years, the IRS has tapped into a multi-billion-dollar modernization fund from the Inflation Reduction Act to address shrinking annual appropriations. Moving around these funds, however, leaves the IRS with less funding to address long-standing problems with its outdated IT systems.
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Democrats on the appropriations committee said the spending deal rejects “poison pill” provisions from earlier proposals. That includes a provision that would block the IRS from creating its own free tax filing software.
The IRS officially shut down Direct File, the agency’s free online tax filing platform that ran for two years, and is exploring alternatives operated by tax preparation companies. The spending bill grants the IRS authority to make new hires more quickly to help address backlogged tax returns.
Under this spending deal, the Small Business Administration would also receive a $1.25 billion budget under this spending deal, rejecting the Trump administration’s plan to cut its funding by over 40%.
GSA funding to offload underutilized office space
Lawmakers are calling on the General Services Administration to accelerate its plans to offload underutilized federal office space. The spending deal, however, falls short of what GSA officials have said is necessary to address a multi-billion-dollar maintenance backlog.
The spending bill allows GSA to spend $9.7 billion from the Federal Buildings Fund. That fund includes rent payments GSA collects from agencies working out of GSA-owned facilities. Included in those funds, GSA receives $166 million in funding for new federal construction projects, and $934 million for federal building repairs.
In a joint explanatory statement, appropriations wrote that they are concerned that deferred maintenance costs for federal real estate are “rising at an unsustainable rate.”
The spending deal would require GSA to conduct a study examining the “administrative and regulatory burdens” GSA faces in the real estate disposal process, and to brief the appropriations committees on its findings.
GSA currently has about $24 billion in deferred maintenance projects. Ed Forst, GSA’s newly confirmed administrator, recently told a Senate panel that about $6 billion is “urgently needed” within the next year or two to address the deferred maintenance backlog. The maintenance backlog, he added, is “likely underestimated,” and will only grow if left unaddressed.
The Public Buildings Reform Board, which advises GSA on underutilized federal properties it should sell or offload, recently told a House subcommittee that GSA will need about $50 billion to address a backlog of deferred maintenance and repairs in federal buildings.
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GSA currently receives about $600 million annually to address those needs. Given those spending levels, the board estimates GSA’s portfolio would have to shrink by about 80% to keep up with its maintenance backlog.
The spending deal would give $3.6 million to the Public Buildings Reform Board. The board is set to disband by the end of this year. Members of the board, however, say their work is far from finished, and have asked Congress to consider reauthorizing the board.
The spending bill also supports President Donald Trump’s executive order designating classical architectural styles as the preferred style for new construction projects.
AI tools to deliver public-facing services
The spending bill also focused on GSA’s government IT portfolio, and directs GSA to help deliver benefits and services to the public more quickly through AI tools.
The spending bill awards $1.4 million to GSA’s Office of Technology Policy to make federal websites more accessible for people with disabilities, as required by Section 508 of the 1973 Rehabilitation Act.
“As the nation’s population ages, there will be more people with disabilities who rely on accessibility tools to access government resources. This underscores the importance of making Federal websites, apps, kiosks, and other technology accessible in the coming decades,” the joint explanatory statement states.
More than half of all federal websites have at least one accessibility issue, according to data collected in 2024 by GSA and the Office of Management and Budget.
The spending package also directs GSA to help agencies improve their public-facing benefits and services through AI tools. The spending deal, however, doesn’t put any funding behind this goal.
“Congress recognizes the importance of improving customer satisfaction for constituents seeking information about benefits and government resources,” appropriators wrote in their joint explanatory statement. “The agreement encourages the GSA to work with federal agencies to develop improved customer experiences when interfacing with their government on its progress toward issuing this guidance.”
State Department funding intact, spares independent agencies from elimination
Lawmakers are proposing modest budget cuts for the State Department, despite going through its largest reorganization in decades.
The minibus gives the State Department a $9.7 billion operating budget, an essentially flat budget compared to the department’s current $9.8 billion operations budget.
The minibus requires the State Department to give Congress quarterly updates on staffing levels, hiring and attrition for its civil service and Foreign Service ranks. The State Department laid off nearly 1,350 employees last summer. It also eliminated or consolidated hundreds of offices and programs.
The bill also rejects the Trump administration’s deep cuts planned for some independent agencies — including the Millennium Challenge Corporation and the U.S. Agency for Global Media, which includes Voice of America. But it doesn’t address the Trump administration’s dismantling of the U.S. Agency for International Development last year. All USAID programs spared from elimination have been folded into the State Department.
Senate Appropriations Committee Vice Chairwoman Patty Murray (D-Wash.) said the spending package reflects “tough negotiations under extremely challenging circumstances,” but is a “significantly better outcome than another yearlong continuing resolution.”
Senate Appropriations Committee Chairwoman Susan Collins (R-Maine) said the “appropriations process continues to move forward and advance priorities of the American people.”
House Appropriations Committee Ranking Member Rosa DeLauro (D-Conn.) said the minibus rejects “extreme cuts to humanitarian aid programs.”
House Appropriations Committee Chairman Tom Cole (R-Okla.) said that with this spending package, lawmakers “are advancing President Trump’s vision of a golden age defined by security, responsibility, and growth.”
If you would like to contact this reporter about recent changes in the federal government, please email [email protected], or reach out on Signal at jheckman.29
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