The IRS will start accepting 2025 tax returns on Jan. 26, marking the official start of the 2026 tax filing season. The filing deadline is April 15. The IRS has faced challenges, including losing tens of thousands of workers through planned layoffs and buyouts spurred by Elon Musk’s Department of Government Efficiency.

It also needs to implement major provisions from President Trump and Congressional Republicans’ tax package. The IRS expects to receive about 164 million individual tax returns this year, roughly on par with last year.

Most of Street drifts as defense companies rally

Modest moves for Wall Street overall masked some big swings underneath the surface, including for makers of weapons and other military equipment. The S&P 500 barely budged on Thursday and remained near its all-time high. The Dow Jones Industrial Average rose 0.6%, and the Nasdaq composite fell 0.4%.

Stocks of defense contractors rallied after President Donald Trump said he wants to increase the U.S. government’s spending on defense sharply. Northrop Grumman, Lockheed Martin and

L3Harris Technologies helped lead the way and offset losses for Nvidia and other tech stocks. Treasury yields ticked higher following mixed data on the U.S. economy.

Trump wants US to buy $200B in mortgage bonds

President Donald Trump says he is directing the federal government to buy $200 billion in mortgage bonds, a move he said would help reduce mortgage rates at a time when Americans are worried about home prices. Trump and the White House have been trying to show they are responding to voter concerns about affordability ahead of midterm elections in November.

Home prices have generally risen faster than incomes because of a construction shortage, making it harder for renters to buy their first home and for existing owners to upgrade. Trump says the two mortgage companies under government conservatorship, Fannie Mae and Freddie Mac, have $200 billion in cash that will be used to make the purchase.

Jobless benefits filings up slightly to end 2025

U.S. filings for unemployment benefits rose in the last week of 2025 but remain historically low, despite signs that the labor market is weakening. The number of Americans filing for jobless claims for the week ending Jan. 3 rose by 8,000 to 208,000, up from 200,000 the previous week, the Labor Department reported Thursday.

Applications for unemployment aid are viewed as a proxy for layoffs and are close to a real-time indicator of the health of the job market. The total number of Americans filing for jobless benefits for the previous week ending Dec. 27 jumped by 56,000 to 1.91 million, the government said.

‘Beautiful’ new law leaves states with big decisions

State lawmakers and governors will have decisions to make in 2026 about the budgets for their biggest social safety net programs. It comes in response to the tax cut and policy law that President Donald Trump signed last year.

The measure imposes new work requirements for some people with Medicaid health coverage. It also raises the states’ share of costs for the Supplemental Nutrition Assistance Program, or SNAP, which helps 1 in 8 Americans buy groceries. Many states could also decide whether to fall in line with tax cuts, including eliminating income taxes on tips and overtime.