2025 U.S. Government Shutdown – What It Means for Your Taxes

The U.S. has officially entered a federal government shutdown as Congress failed to reach a funding agreement for the new fiscal year beginning October 1, 2025. While shutdowns can feel far removed from everyday life, they directly affect taxpayers and small business owners who rely on timely IRS operations.

Here’s what you need to know about how this 2025 shutdown is impacting taxes:

What Happens During a Shutdown?

A government shutdown occurs when Congress fails to pass—or the President declines to sign—appropriations bills or a temporary funding measure (continuing resolution). This halts many “nonessential” federal operations, while “essential” services such as national security and air traffic control continue. Social Security and Medicare payments, classified as mandatory spending, also continue uninterrupted (Bera, House.gov).

IRS Operations: The First Five Days

The IRS has a contingency plan for 2025. Thanks to funding from the Inflation Reduction Act, IRS operations will continue normally for the first five business days of the shutdown (The Tax Adviser). During this period, returns are being processed, refunds are being issued, and customer service remains available.

What If the Shutdown Lasts Longer?

As the shutdown continues, here’s what taxpayers may experience:

• Delays in processing refunds (especially paper returns).

• Longer wait times for IRS phone and in-person support.

• Slower handling of audits, notices, and disputes.

• Backlog in IRS administrative tasks such as issuing guidance and rulings (Jackson Hewitt).

Importantly, the shutdown does not change tax law. Filing deadlines, such as April 15, remain in place unless Congress takes separate legislative action.

What’s Unique in 2025?

• The IRS’s ability to stay fully operational for the first five days is new, thanks to Inflation Reduction Act funding.

• Recently passed legislation known as the One Big Beautiful Bill (July 2025) made several tax law adjustments. These provisions still apply regardless of the shutdown (Wikipedia).

Practical Tips for Taxpayers

1. File early if you are expecting a refund.

2. Use e-filing and direct deposit to minimize delays.

3. Expect delays with audits or disputes requiring IRS review.

4. Stay updated by monitoring IRS announcements.

5. Plan for uncertainty — especially if you depend on timely refunds or IRS responses.

Final Thoughts

The 2025 shutdown has not yet disrupted IRS operations in the immediate term, but a prolonged funding gap could slow down refunds, audits, and taxpayer assistance. The best defense is preparation: file early, file electronically, and stay informed.