I can’t believe it’s already here again—tax season. Didn’t we just finish filing 2024 returns and 2025 tax planning?
Since time marches on, the IRS began accepting and processing 2025 tax-year returns on Monday, January 26, 2026.
What’s new
The One Big Beautiful Bill Act, signed into law in July 2025, made several changes taxpayers may want to be aware of when preparing their returns, including these:
· New deductions for tip income and overtime pay are available: up to $25,000 for qualified tips and up to $12,500 ($25,000 if married filing jointly) for overtime, both with income limits.
· A new $6,000 senior deduction is available for taxpayers 65 and older ($12,000 if both taxpayers are 65 and older and married filing jointly), with income limits.
· The Child Tax Credit has been increased to $2,200 per qualifying child.
· The State and Local Tax deduction cap increases to $40,000 for most filers, though this benefit begins to phase out for individuals with a modified adjusted gross income (MAGI) over $500,000.
· New deduction for interest on loans for qualifying new vehicles with final assembly in the U.S., for purchases made in 2025–2028.
· New above‑the‑line charitable deduction up to $2,000 for cash gifts to qualifying charities, available even if you don’t itemize, subject to income limits.
Tips to make filing easier
To speed a potential tax refund and help with tax filing, the IRS suggests the following:
· Make sure you have received Form W-2 and other earnings information, such as Forms 1099, from employers and payers before heading to your favorite tax preparer or starting self-preparation.
The dates for furnishing such information to recipients vary by form, but they are generally not required before February 1, 2026. You may need to allow additional time for mail delivery.
Some brokerage 1099s may not be available until sometime in March, and Schedule K-1s for partnership, S corporation, and trust beneficiaries may be furnished close to or after the deadline (which may require an extension to file).
· Go to irs.gov to find Form 1040 or Form 1040-SR (available for seniors born before January 2, 1960), and their instructions.
· File electronically and use direct deposit or direct debit.
· Request an extension of time to file rather than rush through preparation. An extension of time to file does not extend the time to pay, so you must estimate your liability and send it in with your extension.
· Consider whether the cost of professional tax preparation, in light of many new and confusing tax provisions, is in your best interest. Professional tax preparation is recommended for anything but the simplest of returns and often pays for itself in mistakes avoided, taxes and time saved, and frustration avoided.
· Check irs.gov for the latest tax information.
Key filing dates
Here are several important dates to keep in mind:
· January 9. IRS Free File opened. IRS Free File Guided Tax Software, available only at irs.gov/freefile, allows participating software companies to accept completed 2025 tax returns from any taxpayer or family with an adjusted gross income (AGI) of $89,000 or less and electronically file the returns with the IRS.
On January 26, Free File Fillable Forms became available to taxpayers with an AGI above $89,000 to fill out and e-file themselves at no cost.
· January 26. The IRS began accepting and processing individual tax returns.
· April 15. The deadline to file 2025 federal income tax returns (or request an extension) arrives for most taxpayers. If you’re required to make quarterly estimated income tax payments, your 1st quarter 2026 estimated payment is also due (some state tax payment due dates vary slightly from federal due dates).
· June 15 and September 15. These are the due dates for the 2nd- and 3rd-quarter 2026 federal estimated income tax payments. These payments are due even if your 2025 tax return is on extension and has not yet been filed.
· October 15. This is the federal filing deadline for those who requested an extension on their 2025 tax returns.
January 15, 2027. This is the due date for the 4th quarter 2026 federal estimated income tax payment.
Tax refunds
The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. The IRS expects to issue most tax refunds within 21 days of receiving a tax return. That’s true only if:
(1) the return is filed electronically,
(2) the tax refund is delivered via direct deposit and,
(3) assuming there are no issues with the tax return.
To minimize processing delays, the IRS encourages people to avoid paper tax returns whenever possible.
Paper Tax Refund Checks Being Phased Out by the IRS
As part of a broader U.S. Department of the Treasury initiative to transition to fully electronic federal payments, the IRS is phasing out paper tax refund checks for individual taxpayers beginning with the 2026 federal tax filing season and is also reducing reliance on paper check payments made to the IRS in favor of electronic payment options.
Why is the IRS making this change?
The move towards electronic payments is designed to protect taxpayers from the possibility of a paper refund check being lost, stolen, altered, delayed, or returned to the IRS as undeliverable. Electronic refunds (and payments) are also more cost-efficient and faster than non-electronic payments, which can take six weeks or longer to process.
What does this mean for taxpayers?
No changes are being made to the process of filing a tax return. Taxpayers should continue to file their tax returns as they normally would, using one of the existing filing options. However, the shift in refund delivery will be towards electronic payment methods. As a result, taxpayers should have all of their banking information (e.g., account and routing numbers) readily available when filing their returns.
While most tax refunds will be delivered by direct deposit or other secure electronic methods, alternative options, such as prepaid debit cards or digital wallets, will still be available for taxpayers without a bank account.
So plastic? Yes. Paper? No.
What if I owe the IRS money?
The IRS has stated that taxpayers should continue to use existing payment options until further notice, but is strongly encouraging individuals and businesses to use electronic payment options, since they are easier, faster, and more secure. Further IRS guidance is expected soon.
The IRS offers the following electronic payment options:
- IRS Direct Pay, which lets you pay the IRS directly from your bank account without fees
- Electronic Federal Tax Payment System (EFTPS), a free system offered by the U.S. Department of the Treasury to pay your federal taxes (only if you’re already enrolled; new enrollments were suspended as of October 17, 2025)
- IRS2Go, an IRS mobile app that allows you to make secure mobile payments using Direct Pay or card-based options
- Debit card, credit card, or digital wallet payments made through IRS‑approved third‑party processors (convenience fees may apply)
For more information on the IRS transition towards electronic payments, visit modernizing payments.
Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique
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