The Environmental Protection Agency’s (EPA) FY 2026 discretionary budget request of $4.2 billion is a 54% reduction from FY 2025, marking the agency’s lowest funding request over the past decade.

Compared to its highest funding in FY 2023, driven by the Inflation Reduction Act IRA), the request represents a 60% decrease reflecting the shift in agency priorities and funding strategies under the new Administration. 

 

 

 

 

 

 

 

 

 

 

 

 

Budget Highlights and Strategic Alignment:

EPA’s FY 2026 deliberately reflects the agency’s alignment with the Administration’s five strategic pillars with funding disbursed throughout departments and programs. The EPA Congressional Budget Justification includes the following programs:

• Pillar 1: Clean Air, Land, and Water for Every American:
  • Superfund Program: $283M
  • Clean Air Programs (S&T and EPM): $177M
  • Drinking Water Programs: $129M
• Pillar 2: Restore American Energy Dominance:
  • Federal Vehicle and Fuels Standards: $101M
  • Air and Energy Research: $34M
• Pillar 3: Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership:
  • Facilities Infrastructure and Operations: $377M
  • IT/Data Management: $93
• Pillar 4: Make the United States the Artificial Intelligence Capital of the World:
  • IT/Data Management (AI Infrastructure): $93M
  • Save and Sustainable Water Resources: AI Tools: $79M
  • Research and Energy (AI Modeling Tools): $34M
  • Homeland Security Cybersecurity for Water Sector: $12M
• Pillar 5: Protecting and Bringing Back American Auto Jobs:
  • Federal Vehicles and Fuel Standards $101M.

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Information Technology (IT) Programs within the FY 2027 EPA Budget:

The EPA IT and Cybersecurity budget for FY 2026 is $294M with investments including:

• Cybersecurity: $31.6M
  • Information Security Program: $14M
  • Water Sector Cybersecurity Grant Program: $10M
  • Cybersecurity Enhancements for IT Infrastructure: $7M
• Artificial Intelligence (AI)
  • Integrated Environmental Strategies Program: $8M
  • Homeland Security Research (AI-related estimate: $2M
• IT / Data Management
  • Environmental Programs: $79M
  • Superfund: $14M
  • Science & Technology: $3M
•  Data Collection
  • Drinking Water Programs: $124M
  • CASTNET & Air Quality Monitoring: $13M
  • RadNet Radiation Monitoring: $5M

Recissions and Program Eliminations

EPA Administrator Lee Zeldin projects $748.8M in savings for FY 2026. Notably, $740M these savings stem from recissions in the H.R.1/One Big Beautiful Bill (OBBA) of that targeted prior-year unobligated IRA and the Clean Air Act (CAA) funds from previous years. Additionally, the budget eliminates $1.47B across 21 programs including 16categorical grants including those funded through the CAA, the Pollution Prevention Act and the Energy Policy Act of 2005.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Staffing Reductions and Reorganization:

Included in Zeldin’s projected savings are plans to reduce staffing by 3,707 from the 16,155 January 2025 resulting in 12,448 employees in FY 2027. This includes 3,201 voluntary separations under the Fork in the Road Deferred Resignation Program (DRP) and the Voluntary Early Retirement (VERA) Program.

““Under President Trump’s leadership, EPA has taken a close look at our operations to ensure the agency is better equipped than ever to deliver on our core mission of protecting human health and the environment while Powering the Great American Comeback. This reduction in force will ensure we can better fulfill that mission while being responsible stewards of your hard-earned tax dollars,” Zeldin said.

The budget funds the creation of the Office of Finance and Administration (OFA) by combining the Office of the Chief Financial Officer (OCFO) and the Office of Mission Support (OMS). The OFA will consolidate the operation of grants management, acquisitions, human resources, IT, and information management functions into a “streamlined, one-stop-shop for all financial and administrative operations.”  

Additional organizational changes include:

• OECA: Realigned compliance and enforcement processes to better address pollution.
• OLEM: Enhanced focus on contamination prevention, remediation, and emergency response.

Executive orders emphasizing deregulation, energy and AI dominance, climate program restructuring, permitting reforms are the impetus for these changes.

“These structural changes reinforce EPA’s unwavering commitment to fulfill its statutory obligations and uphold fiscal responsibility. By partnering our operations and mission support services, we can deliver results for American communities while remaining good stewards of taxpayer dollars,”  Zeldin explained.  

Conclusions

Despite its sharp budget reduction, the EPA workface and organizational reshaping present new contracting opportunities in FY 2026. Energy and AI dominance will drive contracting opportunities in FY 2026. This includes AI-driven research and infrastructure modernization, IT support for data collection and analysis, environmental modeling and cybersecurity enhancements. Deregulations and permitting reforms will create opportunities across all market sectors including previously environmentally prohibited and limited manufacturing and construction projects. To remain competitive, firms must maintain ongoing engagement, understand evolving agency priorities, and adapt quickly to the dynamic federal landscape.

For more information, check out Deltek’s initial budget overview, FY 2026 President’s Budget Request – GovWin FMA’s First Take and monitor the Federal Market Analysis team for additional FY 2026 federal budget information.