ATF Budget Good News for Gun Store Owners?

We’ve known for a few weeks that the Trump administration wants to slash the ATF’s budget by about 25%, but we haven’t heard how those cuts will be achieved until now. 

As the New York Times reports, the Justice Department recently released a budget summary that provides details on the DOJ’s budget for FY2026, including agencies under the Justice Department’s purview like the Bureau of Alcohol, Tobacco, Firearms, and Explosives. That summary shows the ATF’s budget falling from about $1.6 billion to $1.2 billion, with much of the savings coming from a reduction in force. 

While the number of ATF field agents will remain almost unchanged, going from 2,630 agents in FY2025 to 2,444 agents in FY2026 (the number of ATF attorneys is expected to remain at 107), the budget calls for steep cuts to the number of Industry Operations Investigators, who are tasked with regulatory inspections of FFLs. 

According to the DOJ summary, ATF will “eliminate 541 Industry Operations Investigators (IOIs), reducing ATF’s capacity to regulate the firearms and explosives industries by approximately 40 percent in FY 2026.” The Justice Department says that will save about $81.8 million, though it will result in fewer regulatory inspections of Federal firearms and explosives.

As you can imagine, the gun control lobby (and some ATF employees) aren’t happy about the proposed budget. 

“These are devastating cuts to law enforcement funding and would undermine A.T.F.’s ability to keep communities safe from gun violence,” said John Feinblatt, the president of Everytown for Gun Safety, a nonprofit advocacy group founded by the former mayor of New York Michael R. Bloomberg. “This budget would be a win for unscrupulous gun dealers and a terrible setback for A.T.F.’s state and local law enforcement partners.”

The inspection program is already woefully understaffed: A small percentage of the 100,000 or so dealers, collectors and manufacturers monitored by the A.T.F. are inspected in any given year — and some licensees can go nearly a decade without facing routine regulatory scrutiny. The inspections have, nonetheless, become a target of Republicans, who view them as an intrusion into gun rights.

But A.T.F. officials, law enforcement groups and gun control activists see such routine monitoring as a fundamental safeguard against abuses that have led some retail outlets to become sources for criminals and straw purchasers paid to buy guns.

While there might be fewer overall inspections, the ATF should have plenty of staff to inspect what the gun control lobby calls the “small number of bad apples” who are responsible for selling an outsized number of firearms that end up traced. According to Brad, 90% of “crime guns” are sold by only 5% of FFLs. 

In reality, not every gun that’s traced is used in a crime, and not every gun used in a crime ends up getting traced. Many of these so-called bad apples are simply high-volume firearm retailers; the more guns sold, the more likely it is that one of them will end up being traced for one reason or another. 

Still, the ATF has the ability to work smarter, not harder, in terms of industry inspections. The proposed reductions in the number of IOIs will still leave enough inspectors in place to conduct reviews of FFLs that raise red flags with a large number of straw purchases or even large numbers of guns that are traced back to violent crimes within a relatively short period of time after the initial retail sale.

The proposed budget for FY2026 doesn’t call for any specific reductions in the number of staff assigned to the NFA Division, though if the language of the Hearing Protection Act and the SHORT Act are ultimately included in the One Big Beautiful Bill and are signed into law the agency won’t need as many employees to approve NFA applications. 

Gun control activists are going to raise as much hell as they can over the proposed cuts, but they’ll also be redoubling their efforts to get state-level licensing and inspection regimes in place. About 27 states already have some type of oversight over firearm retailers, and the gun control lobby is looking to both expand that number and increase regulations and requirements for FFLs in those states that already have dealer licensing laws. 

The ATF’s proposed budget cuts will give the anti-gunners a new talking point for those efforts, and blue state FFLs should start preparing for an onslaught of new mandates in coming months; not from D.C., but from their own statehouses.