Tax time, already? It may seem like we just wrapped up the 2024 tax season, but it’s already time to start thinking about 2025 taxes! You may have already begun pulling together everything you need—all the records of your income and other taxable events from 2024. If you haven’t, now is the perfect time to start. Either way, here’s what you need to know about doing your taxes in 2025.

Key dates

  • Late January: Tax season begins
    • In late January, the IRS will start accepting tax returns for the 2024 tax year. They haven’t announced a specific date yet; it was January 29th last year, so it will likely be in the last few days of January. As long as you have your W-2 form for 2024, you can prepare your taxes and file them anytime on or after the start date, once the IRS tells us what it is. (We’ll add it here, of course!)
  • April 15: Tax Day 2025
    • Taxes are due April 15. This is also the last day you have to make 2024 contributions to IRA accounts.
  • October 15: Tax extension due date 2025
    • If you choose to file an extension on your taxes, your new tax return due date will be Wednesday, October 15. You need to file your extension by the April 15 due date. Note that this extension only gives you extra time to file your return. If you owe a balance to the IRS, you still have to pay that amount—or an estimate of what you owe—by the April due date. If you’re owed a refund, you won’t receive it until after you file your return (by the extended date).

Key forms

The most important form for individual filing is IRS Form 1040. This is the “master form,” where you list all your income, deductions, and credits. It sounds intimidating, but don’t worry—it’s just one sheet of paper with two sides. Every other piece of paper attached to the tax return supports an item on Form 1040.

You might need:

  • Form W-2
    • If you earned money as an employee in 2024, you’ll get a W-2 from each employer. When you open your W-2, you’ll see the total amount you earned in wages, tips, and other compensation from that employer in 2024, along with all the taxes that were withheld. These will be federal, state, and local taxes withheld, as well as Social Security and Medicare taxes. There may be other amounts or codes on the W-2 for special circumstances.
  • Form 1099
    • If you earned other money in 2024 that was not from an employer, it will probably be reported on a 1099. There are different varieties of 1099s for different types of income.
      • Interest income (from investments or bank accounts) is reported on a 1099-INT.
      • Dividends get a 1099-DIV.
      • If you had rental income or received money as an independent contractor, you will get a 1099-NEC or 1099-MISC.
      • Business money received from a third-party transaction agent such as Paypal or Venmo will receive a 1099-K.
        • A note about 1099-Ks: We’ve heard a lot in recent years about 1099s being issued for lower thresholds. As of December 2023, the IRS decided to postpone the requirement for payment processors to issue 1099-Ks for amounts over a certain dollar amount, so it did not take effect in 2024. But now it has—payment processors will be required to report any 2024 transactions totaling over $5,000 as taxable income to the IRS. (“Friends and family” transactions were never included in the IRS’s calculations and remain nontaxable transactions.)
  • Form 1098
    • IRS Form 1098 shows the amount you paid in mortgage loan interest. This is a deductible expense if you choose to itemize your deductions. It will be issued to you from your mortgage lender.
  • Form 1095-A
    • If you were covered through Health Insurance Marketplace (a government-run service that helps people and families shop for and enroll in health insurance if they don’t have coverage through an employer) for any period during the tax year, you’ll get this form. It will show the months out of the year you were covered, what medical tax credits you used, and how much you paid in premiums. While all forms are important to file an accurate tax return, this one is especially important. If you’re missing it, you will not have proof of healthcare coverage and will face steep penalties for missing health coverage for the year.
  • Form 8889
    • If you have a high-deductible health plan, you may also have an HSA account for medical spending. Contributions to and distributions from an HSA are nontaxable as long as they are used for qualified medical expenses.
      • These contributions and distributions—money in and money out—of the HSA are reported on Form 8889. You may get this form from your bank or other financial institution that holds your HSA account. Be sure to have receipts from any money spent to prove that your expenses were qualified medical expenses.

Common taxable events

A “taxable event” is something that you did or that happened to you that affects your tax return. Did you deal with any of these in 2024?

  • Family events
    • Changes in your personal life can affect your tax return.
    • Marriage qualifies you to file a joint return with your spouse. This can come with the benefit of a lower tax bracket, especially if one spouse is nonworking or has a significantly lower income.
    • If you divorced and did not remarry, you must switch to either a single or head of household filing status.
    • If your spouse died in 2024 or 2023, you may qualify for the Qualifying Surviving Spouse (formerly Qualifying Widow) filing status. This allows you to have the same tax benefits as married, filing jointly for an additional two years after the spouse’s death.
    • The birth of a child qualifies you for an additional child tax credit. Adoption can also qualify and lead to tax credits—both for the added child tax credit and the adoption expenses themselves.
  • Purchase or sale of a primary residence
    • If you bought a new home this year, you may choose to deduct your mortgage loan interest and property taxes paid on your federal income taxes.
    • If you sold a home this year, you will have to report any gain or loss on the sale. If it is the sale of a primary residence, you will probably be able to exclude most or all of the gain from the sale.
  • Affected by a qualified disaster
    • Parts of the country were affected by natural disasters in 2024. Wildfires, tornadoes, earthquakes, and hurricanes caused millions of dollars of casualty losses across the country.
      • Affected individuals may be able to deduct these losses. Consult a tax pro to determine if you qualify for this deduction.
  • Sale of an asset
    • If you bought or sold an asset, such as stocks, bonds, or precious metals, you must report any gain or loss on the asset’s sale. If you bought it and sold it within the same year, it is counted as a short-term capital gain and will be taxed at a much higher rate. If you have held this asset for more than a year, it will be taxed as a long-term capital gain instead.

Important tax changes for 2025

  • Income tax brackets have been updated again.
  • The standard deduction has been increased slightly:
    • For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600.
    • For married taxpayers filing jointly, the standard deduction is $29,200.
    • For heads of households, the standard deduction will be $21,900 for tax year 2024.
  • Retirement contribution limits for 401(k), 403(b), and most 457 and Thrift Savings Plans have been increased by $500 to $23,000. (And if you’re 50 or older, you qualify to make an additional $7,500 catch-up contribution for this tax year.)
  • The maximum credit per child has been increased, and you can now choose between your current year’s income or your previous year’s income when you calculate the credit. The maximum refundable child tax credit has been adjusted to $1,900 per child for tax year 2024.
  • Long-term capital gains income thresholds have been adjusted for inflation. Review these changes to understand how they may affect your investment strategies. Individual filers won’t pay any capital gains tax if their total taxable income is $47,025 or lower. But if their income is $47,026 to $518,900, they’ll pay 15 percent. Above that income range, the rate jumps up to 20%.
  • Various other changes have been made to help counter inflation, including the Alternative Minimum Tax (AMT) exemption and the estate tax exclusion. Visit the linked pages to see if these updates could affect your filing. 

FAQs

  • When will I get my refund?
    • If you want to check the status of your tax return after you file, you can check it on the IRS website. If you e-file your tax return, the status of your return and refund will be viewable within 36 hours. If you file a paper return, expect to wait at least 4 weeks before you can see your return status.
    • Most tax refunds will be issued to taxpayers within 3 weeks of return processing. Don’t rely on this as a guarantee if you have bills to pay, though – some refunds may take longer or be selected randomly for audit.
  • What if I don’t file?
    • If your 2024 income was low enough that you didn’t need to file a tax return (check this table to see if your income requires you to file a return), there are no consequences for failing to file a tax return. However, it may be a good idea to file a return anyway–it can provide you with valuable proof of income for other benefits or qualify you for refundable tax credits.
    • If (like most people) you do need to file a return and you fail to do so, you will pay a Failure to File penalty of 5% of your unpaid tax per month for up to 5 months. This will bring your total possible Failure to File penalty to 25% of your total tax due, plus interest on the unpaid balance.
  • What if I can’t pay my taxes?
    • If you know that you will owe taxes and that you won’t be able to pay them, it may be tempting to simply not file at all. Don’t do that! If you do not file at all, you will incur both a Failure to File and a Failure to Pay penalty. The Failure to File penalty will max out after 5 months, but the Failure to Pay penalty will keep going. Even if you cannot pay your taxes, you still should file the return. This will stop the Failure to File penalty. You will still incur a Failure to Pay penalty, but it is much less–only 0.5% per month, plus interest, until the tax is paid. Here’s more information about what to do if you can’t pay your taxes.
    • You can avoid some penalties, but not interest, by arranging a payment plan with the IRS to pay your tax due. Instead of committing tax evasion, this shows good faith that you want to pay your taxes but are unable to. The interest rate on unpaid taxes and penalties varies and is based on the federal short-term interest rate. Here’s some additional information on what to do if you cannot pay your taxes.

Whew! That’s a lot. But hopefully, this information makes you feel more prepared for the 2025 tax season. If you need help, open the Brigit app and head to the Earn & Save tab. We have exclusive partnerships with tax companies to help you do everything from filing your taxes for free (Yes, free!) to working with a pro if you find yourself in a sticky situation.

This blog is for informational purposes, and should not be viewed as advice or opinion. This blog should not be viewed as a substitute for recommendations of a trained tax professional. It is recommended that you consult a tax professional before applying this material.