USTaxPenaltySaverKey Dates for the 2026 Filing Season
January 26, 2026: IRS began accepting 2025 tax returns. The IRS Free File program opened on January 9 for taxpayers with adjusted gross income of $84,000 or less.
April 15, 2026 (Wednesday): Deadline to file your 2025 federal income tax return and pay any taxes owed. Also the deadline to file Form 4868 for an automatic 6-month extension and to make 2025 IRA contributions.
October 15, 2026: Extended filing deadline for taxpayers who filed Form 4868. Remember: you still owe interest and failure-to-pay penalties from April 15 on any unpaid balance.
Disaster extensions: Some taxpayers affected by federally declared disasters get extra time. For example, Washington state residents affected by the December 2025 flooding have until May 1, 2026. Check IRS.gov/disaster for your area.
New Deductions Under the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced four major new deductions for individuals, all claimed on the new Schedule 1-A. These deductions are available for tax years 2025 through 2028.
No Tax on Tips: Employees and self-employed individuals in traditionally tipped occupations can deduct up to $25,000 in qualified tips. For self-employed taxpayers, the deduction cannot exceed net income from the tipped business. Phase-out begins at $150,000 MAGI ($300,000 married filing jointly). Not available for married filing separately.
No Tax on Overtime: Employees can deduct the premium portion of qualified overtime pay (generally the 'half' in time-and-a-half) required under the Fair Labor Standards Act. Maximum deduction is $12,500 (single) or $25,000 (married filing jointly). Same phase-out thresholds as tips.
Senior Deduction: Taxpayers age 65+ can claim an additional $6,000 deduction per person ($12,000 for married couples where both qualify). This is on top of the existing additional standard deduction for seniors. Phase-out begins at $75,000 MAGI ($150,000 joint). Available whether you itemize or take the standard deduction.
Auto Loan Interest: Individuals can deduct up to $10,000 in interest paid on a qualifying auto loan for personal use. Phase-out begins at $100,000 MAGI ($200,000 joint). Lease payments do not qualify.
Other Notable Tax Changes for 2025 Returns
Child Tax Credit increase: The CTC has been permanently increased to $2,200 per qualifying child under 17, up from $2,000. This amount is now indexed for inflation.
SALT cap increase: The state and local tax (SALT) deduction cap has been raised from $10,000 to $40,000 for 2025 and beyond. This is a significant change for taxpayers in high-tax states like New York, New Jersey, California, and Connecticut.
1099-K threshold restored: The OBBBA reverted the 1099-K reporting threshold back to $20,000 and 200 transactions. The previously planned $600 threshold is no longer in effect. However, all income remains taxable regardless of whether a 1099-K is issued.
Paper refund checks phased out: The IRS is transitioning to direct deposit only for refunds. Set up a bank account for direct deposit to avoid delays.
What Happens If You Miss the April 15 Deadline
Failure-to-file penalty: 5% of the unpaid tax for each month (or partial month) your return is late, up to a maximum of 25%. If you file more than 60 days late, the minimum penalty is $525 or 100% of the unpaid tax, whichever is less.
Failure-to-pay penalty: 0.5% of the unpaid tax for each month the payment is late, up to 25%. This applies even if you file an extension, because the extension only extends your filing deadline, not your payment deadline.
Interest: The IRS charges interest at the federal short-term rate plus 3 percentage points, compounded daily. For Q1 2026, the rate is 7% annually. On a $5,000 balance, that is roughly $0.96 per day in interest.
Combined impact example: If you owe $5,000 and file 3 months late without paying, you face approximately $750 in failure-to-file penalties (5% x 3 months = 15% of $5,000), $75 in failure-to-pay penalties (0.5% x 3 months), and about $88 in interest. Total cost of being 3 months late: approximately $913.
How to Minimize Penalties
File on time, even if you cannot pay. The failure-to-file penalty (5% per month) is 10 times more expensive than the failure-to-pay penalty (0.5% per month). Filing on time with an unpaid balance eliminates the most expensive penalty entirely.
Pay as much as possible by April 15. Even a partial payment reduces the balance on which penalties and interest accrue. If you owe $5,000 and pay $4,000 by April 15, penalties and interest only apply to the remaining $1,000.
File Form 4868 if you need more time. The extension is free, automatic, and gives you until October 15. It eliminates the failure-to-file penalty. Estimate your tax and pay what you can with the extension.
Set up a payment plan immediately. If you owe $50,000 or less, you can apply for an installment agreement online at IRS.gov/opa. While your application is pending, the IRS generally will not take collection action.
Check FTA eligibility. If this is your first penalty in 3 years, you may qualify for First-Time Abatement, which removes the failure-to-file and failure-to-pay penalties entirely. Use our free eligibility checker.
Estimated Tax Payments for 2026
If you expect to owe $1,000 or more in tax for 2026 (from self-employment, investments, or insufficient withholding), you should make quarterly estimated tax payments. The 2026 quarterly deadlines are: April 15, June 15, September 15, and January 15, 2027.
Missing estimated tax payments triggers the estimated tax penalty (Form 2210), which is calculated separately from failure-to-file and failure-to-pay penalties. The safe harbor rule: pay at least 100% of your prior year tax (110% if your AGI exceeds $150,000) or 90% of your current year tax to avoid the estimated tax penalty.
Use our estimated tax calculator to determine your quarterly payment amounts and check whether you are meeting the safe harbor threshold.
Key Takeaways
April 15, 2026 is the deadline for 2025 returns. No weekend or holiday shift this year. File on time or request an extension by that date. Pay what you can by April 15 to minimize penalties.
Take advantage of the new OBBBA deductions if they apply to you: tips ($25,000 max), overtime ($12,500/$25,000 max), senior deduction ($6,000 per person), and auto loan interest ($10,000 max). These are all claimed on the new Schedule 1-A.
If you have already missed the deadline, file immediately and pay what you can. Check your FTA eligibility, and use our free penalty calculator to see exactly what you owe before the IRS sends a notice.