Tax Day, when you are required to file your return and pay the government, comes around every April 15 whether we want it to or not.
Tax Day this year is on Wednesday, April 15, 2026, for most 2025 returns, but if you’re not ready to file by that deadline, you can request an extension (which also must be done by the tax-filing deadline but will give you until October 15 to file your taxes). It’s important to remember to follow the rules when filing an extension, however. The key rule: You still need to pay what you owe by the tax filing deadline, or you could face penalties and fees.
Even the most organized person can forget something. Nearly two-thirds of taxpayers got a refund last year, with the average refund running $3,052, according to the Internal Revenue Service (IRS). Note, if the IRS wants something from you, they will write, not call, which is the hallmark of many IRS scams. The risk of getting audited is generally very low for most Americans.
Check Your Work
It is wise to be careful and do a last-minute check of the details before you file your tax return.
Here are a few questions to ask yourself:
- Are you missing any 1099 forms?
- Did you account for any taxes due on unemployment payments received?
- If education costs changed over the course of the year, did you reconcile the changes with any qualified withdrawals?
- Do you have any net losses from this current tax year or previous tax year to carry over?
- Do you have all your dividends and interest? (Just because you reinvested them doesn’t mean you don’t owe taxes on them.)
Standard Deductions vs. Itemized Deductions
Taxpayers have the option to either take the standard deduction (a lump sum amount that all taxpayers are allowed to write off every year) or itemize their returns and write off a number of smaller deductions all at once.
If you are not taking the standard deduction, consider your possible itemized deductions. The major ones include state and local taxes, medical and dental expenses, home mortgage interest, charitable donations, and deductions for casualty and theft losses from a federally declared disaster. Another item many people may miss is claiming a home office deduction if they are self-employed.
Here are some aspects that changed for the 2025 tax year:
Deductions
- Higher Standard Deductions For 2025, the standard deduction increases to $15,750 for single filers and $31,500 for joint filers.
- The Child Tax Credit For 2025 increases to $2,200 per child aged 17 or younger. The credit is also subject to a phase-out starting at $400,000 for joint filers and $200,000 for single filers. For other qualified dependents, you can claim $500 credit.
- Senior Deduction Individuals born before January 2, 1961, may claim an additional deduction whether they itemize or not of $6000 or $12,000 for joint filers. The benefit phases out for modified adjusted gross income (MAGI) between $75,000 to $175,000 for single filers and $150,000 to $250,000 for joint filers.
- Car Loan Deduction Taxpayers who finance a new U.S.-built personal use vehicle with a gross-weight rating of less than 14,000 pounds in 2025 may deduct up to $10,000 in interest. Lease payments do not apply. The deduction phases out above $100,000 MAGI for single filers and $200,000 for joint filers. This “above-the-line” deduction reduces taxable income for both standard and itemizing filers.
- State and Local Tax (SALT) Deduction This deduction allows taxpayers who itemize on their federal returns to deduct up to $40,000 ($20,000 married filing separately) for the 2025 tax year in state and local income/sales and property taxes. This cap, significantly increased from $10,000 for 2025–2029, applies to taxes paid to state/local governments.
- Overtime income tax deduction This is a deduction of up $12,500 of qualified overtime pay per person, not to exceed $25,000 (joint filers can claim the full $25,000). Note that the deduction is available only for overtime pay required by the Fair Labor Standards Act (FLSA). Extra pay earned under state laws, collective bargaining agreements, or employers’ compensation plans isn’t eligible. The deduction starts to phase out once MAGI is over $150,000 for a single filer, and $300,000 for joint filers.
- Tax on Tips Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income. Over 60 jobs have been designated as occupations that “customarily and regularly” received tips before 2025. Phaseouts begin at MAGI of $15,000 for single filers and $300,000 for joint filers.
The Rules on Contributions
You can make contributions to traditional IRAs, Roth IRAs up until the federal tax-filing deadline, April 15, 2026, for most 2025 returns. The limit is $7000, with an additional $1000 catch-up contribution for those aged 50 or older. For 2026, the IRA contribution limit increases to $7500, with an additional $1100 catch-up contribution for those aged 50 or older.
The contribution limits for tax-deferred 401(k)s and Roth 401(k)s is $23,500 in 2025. If you are age 50 or older, you qualify to make an additional $7,500 catch-up contribution for this tax year as well. For 2026, the annual limit is increased to $24,500 and the aged 50 or older limit is increased to $8,000. According to the Secure 2.0 Act, starting in 2026, workers earning more than $145,000 will have to make 401(k) catch-up contributions on an after-tax (Roth) basis at their employer.
For 2025, the maximum you can contribute to a Health Savings Account (HAS) is $4,300 for an individual and $8,550 for a family. People 55 and older can contribute an extra $1,000 catch-up contribution. To be eligible for an HSA, you must be enrolled in a high-deductible health plan.
Be sure to check income limits for all these contributions.
Conclusion: Know Your Role
Whether you’re filing a straightforward return or navigating a more complex situation due to higher income, understanding how your filing status, deductions, and capital gains thresholds interact with the tax code can help you make smarter decisions as a taxpayer.
Strategic planning—such as timing investment sales or maximizing retirement contributions—can reduce your tax liability and improve your long-term financial outlook.
Whether your situation is more problematic or not, consulting a tax professional may help you uncover opportunities and avoid costly mistakes. The more informed you are before filing your tax return, the better positioned you will be to take advantage of available exemptions, credits, and planning strategies.
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