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When medical expenses are — and aren’t — tax deductible

Tax Prep, Planning & Strategy|February 24, 2026

If you had significant medical expenses last year, you may be wondering what you can deduct on your 2025 income tax return. Income-based thresholds and other rules can make it hard to claim the medical expense deduction. At the same time, more types of expenses may be eligible than you might expect.

Limits on the deduction

Medical expenses are deductible only if they weren’t reimbursable by insurance or paid via tax-advantaged accounts (such as Flexible Spending Accounts or Health Savings Accounts). In addition, they’re deductible only to the extent that, in aggregate, they exceed 7.5% of your adjusted gross income (AGI).

For example, if your 2025 AGI was $100,000, your eligible medical expenses during the year would have to total more than $7,500 for you to claim the deduction — and only the amount in excess of that floor would be deductible. If you had $10,000 in eligible expenses, your potential deduction would be $2,500.

In addition, medical expenses are deductible only if you itemize deductions. For itemizing to be beneficial, your itemized deductions must exceed your standard deduction. Due to changes under the Tax Cuts and Jobs Act that were made permanent by last year’s One Big Beautiful Bill Act (OBBBA), many taxpayers no longer itemize.

However, some taxpayers who hadn’t been itemizing recently may benefit from itemizing for 2025 because of the OBBBA’s quadrupling of the state and local tax deduction limit. If you fall into that category, you should also revisit whether you can benefit from the medical expense deduction on your 2025 income tax return.

What expenses are eligible?

If you do expect to itemize deductions on your 2025 income tax return, now is a good time to review your medical expenses for the year and see if you had enough to exceed the 7.5% of AGI floor. Eligible expenses include many costs besides hospital and doctor bills. Here are some other types of expenses you may have had in 2025 that could be deductible:

Transportation. The cost of getting to and from medical treatment is an eligible expense. This includes taxi fares, public transportation or using your own vehicle. Your vehicle costs can be calculated at 21 cents per mile for medical miles driven in 2025, plus tolls and parking. Alternatively, you can deduct certain actual vehicle-related costs, including gas and oil, but not general costs such as insurance, depreciation and maintenance.

Insurance premiums. The cost of health insurance is a medical expense that can total thousands of dollars a year. Even if your employer provides you with coverage, you can deduct the portion of the premiums you paid — as long as it wasn’t paid pretax out of your paychecks.

Long-term care insurance premiums also qualify, subject to dollar limits based on age. Here are the 2025 limits:

40 and under: $480
41 to 50: $900
51 to 60: $1,800
61 to 70: $4,810
Over 70: $6,020

Therapists and nurses. Services provided by individuals other than physicians can qualify if they relate to a medical condition and aren’t for general health. For example, the cost of physical therapy after knee surgery qualifies, but the cost of a personal trainer to help you get in shape doesn’t. Also qualifying are amounts paid for acupuncture and those paid to a psychologist for medical care. In addition, certain long-term care services required by chronically ill individuals are eligible.

Eyeglasses, hearing aids, dental work and prescriptions. Deductible expenses include the cost of glasses, contacts, hearing aids, dentures and most dental work. Purely cosmetic expenses (such as teeth whitening) don’t qualify, but certain medically necessary cosmetic surgery is deductible. Prescription drugs qualify, but nonprescription drugs such as aspirin don’t, even if a physician recommends them.

Smoking-cessation programs. Amounts paid to participate in a smoking-cessation program and for prescribed drugs designed to alleviate nicotine withdrawal are deductible expenses. However, nonprescription gum and certain nicotine patches aren’t.

Weight-loss programs. A weight-loss program is a deductible expense if undertaken as treatment for a disease diagnosed by a physician. This could be obesity or another disease, such as hypertension, for which a doctor directs you to lose weight. It’s a good idea to get a written diagnosis. In these cases, deductible expenses include fees paid to join a weight-loss program and attend meetings. However, foods for a weight-loss program generally aren’t deductible.

Dependents and others. You can deduct the medical expenses you pay for dependents, such as your children. Additionally, you may be able to deduct medical expenses you pay for an individual, such as a parent or grandparent, who would qualify as your dependent except that he or she has too much gross income or files jointly. In most cases, the medical expenses of a child of divorced parents can be claimed by the parent who pays them.

Determining if you can benefit

After reviewing this list of eligible expenses, do you think you had enough in 2025 to exceed the 7.5% of AGI floor? Or do you have questions about whether specific expenses qualify? Contact us. We can determine if you can benefit from the medical expense deduction — and other tax breaks — on your 2025 income tax return.

Tax filing update for pass-through entities

Tax Prep, Planning & Strategy|February 19, 2026

Do you operate a business as a partnership, a limited liability company (LLC) treated as a partnership for tax purposes or an S corporation? In tax lingo, these are called “pass-through” entities because their taxable income items, tax deductions and tax credits are passed through to their owners and taken into account on the owners’ federal income tax returns. These entities generally don’t owe any federal income tax themselves. Here are some important things to know about tax filing for pass-through entities.

March 16 deadline

Even though pass-through entities generally don’t owe federal income tax at the entity level, they still must file a federal income tax return. Partnerships and LLCs treated as partnerships for tax purposes file Form 1065, “U.S. Return of Partnership Income.” S corporations file Form 1120-S, “U.S. Income Tax Return for an S Corporation.”

If your pass-through entity uses the calendar year for tax purposes, as most do, the deadline for filing the federal income tax return for its 2025 tax year is March 16, 2026 (because March 15 falls on a Sunday).

The March 16 deadline can be extended by six months to September 15, 2026, by filing IRS Form 7004, “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns,” by March 16.

Keep in mind that if you file an extension for the pass-through entity’s return, you (and any other owners) will also likely also need to file extensions to October 15, 2026, for your individual 2025 return.

Schedules K-1

For each tax year, pass-through entities must send out Schedules K-1 to their owners. These forms report each owner’s share of the entity’s tax items. Schedules K-1 can be sent to owners electronically. And they must be included with the entity’s federal income tax return for the year.

Because pass-through entity owners rely on Schedules K-1 to prepare their returns, it’s desirable to get them out as early as possible. However, if an entity’s 2025 return filing deadline is extended to September 15, 2026, that also becomes the deadline for providing Schedules K-1 to the owners.

3 tax law changes to note

The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, included several tax changes that will affect 2025 returns of pass-through entities. Here are three of the most important:

1. First-year depreciation. The OBBBA permanently restored 100% first-year depreciation for eligible assets acquired and placed in service after January 19, 2025. Before the OBBBA, 100% bonus depreciation was last allowed for eligible assets placed in service in 2022.

For eligible assets placed in service in tax years beginning in 2025, the OBBBA increased the maximum amount that can be immediately deducted via the first-year Section 179 expensing election to $2.5 million (up from $1.25 million before the OBBBA). The deduction begins to phase out dollar for dollar when asset acquisitions for 2025 exceed $4 million (up from $3.13 million before the OBBBA).

The OBBBA also established 100% first-year depreciation for nonresidential real estate that’s classified as qualified production property. That basically means factory buildings.

2. R&E expenditures. The OBBBA allows businesses to immediately deduct eligible domestic research and experimental (R&E) expenditures that are paid or incurred in tax years beginning in 2025 and beyond. Before the OBBBA, these expenditures had to be amortized over five years.

Eligible small businesses can elect to apply the new immediate deduction rule retroactively to pre-2025 tax years beginning in 2022, 2023 or 2024. Also, all taxpayers that made R&E expenditures in tax years beginning in 2022 through 2024 can elect to write off the remaining unamortized amount of their R&E expenditures over a one-year or two-year period starting with the tax year beginning in 2025.

3. Business interest expense deductions. For tax years beginning in 2025 and beyond, the OBBBA permanently installed more favorable rules for determining how much business interest expense can be currently deducted. While most small and midsize businesses are exempt from the business interest expense deduction limitation rules, check with us regarding the status of your pass-through entity.

Time to get rolling

The filing deadline for the 2025 federal income tax returns of most pass-through entities is looming. While the deadline can be extended by six months, you must take action by March 16, at minimum, to file for an extension. Contact us to get things rolling.

Before claiming a charitable deduction for 2025, make sure you can substantiate it

Tax Prep, Planning & Strategy|February 17, 2026

If you itemize deductions on your 2025 individual income tax return, you potentially can deduct donations to qualified charities you made last year. But your gifts must be substantiated in accordance with IRS requirements. Exactly what’s required depends on various factors. In some cases, you must have a written acknowledgment from the charity.

Substantiating cash donations

If you made a cash gift of under $250, documentation such as a canceled check, bank statement or credit card statement is adequate. However, if you received something in return for the donation, you generally must reduce your deduction by its value — and you must have received a “contemporaneous written acknowledgment” from the charity.

Likewise, for a donation of $250 or more, you must obtain such an acknowledgment. In it, the charitable organization must state the amount of the donation, whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services.

The “contemporaneous” requirement can sometimes trip up taxpayers. It means the earlier of:

The date you file your tax return, or
The due date of your return, including extensions.

Therefore, if you made a donation last year that requires a contemporaneous written acknowledgment but you haven’t yet received it from the charity, it’s not too late — as long as you haven’t filed your 2025 return. Contact the charity now and request a written acknowledgment.

Substantiating property donations

Gifts of property worth $250 or more also generally require a contemporaneous written acknowledgement from the charity. Rather than listing a dollar value for the donation, it must simply include a description of the property. But as with cash donations of $250 or more, it must state whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services.

Some types of donations require additional substantiation. For example, if you donate property valued at more than $500, you must attach a completed Form 8283, “Noncash Charitable Contributions,” to your return. And for donated property with a value of more than $5,000, you generally must obtain a qualified appraisal and attach an appraisal summary to your tax return. But donations of publicly traded securities don’t require an appraisal.

Tax-smart charitable giving

Many other rules and limits can affect your charitable deductions. We can help you determine what you can claim on your 2025 return and plan a tax-smart charitable giving strategy for 2026. Contact us to get started.

Tax filing FAQs for individuals

Tax Prep, Planning & Strategy|February 12, 2026

The IRS is opening the filing season for 2025 individual income tax returns on January 26. This is about the same time as when the agency began accepting and processing 2024 tax year returns last year, despite IRS staffing having been significantly reduced since then. Here are answers to some FAQs about filing.

When is my 2025 return due?

For most individual taxpayers, the deadline to file a 2025 return or an extension is April 15. Individuals living outside the United States and Puerto Rico or serving in the military outside those two locations have until June 15.

When must 2025 W-2s and 1099s be provided to me?

To file your tax return, you need all your Forms W-2 and 1099. February 2 is the deadline for employers to issue 2025 W-2s to employees and, generally, for businesses to issue Forms 1099 to recipients of any 2025 interest, dividend or reportable miscellaneous income payments (including those made to independent contractors).

Normally these forms must be furnished by January 31. But this year, that date falls on a Saturday. So the deadline is the next business day, which is Monday, February 2.

If you haven’t received a W-2 or 1099 by the deadline, contact the entity that should have issued it. But remember that if a form is provided to you via mail instead of digitally, February 2 is the postmark deadline. So you might not receive it until several days after that.

Are there benefits to filing early?

One benefit is that if you’re getting a refund, you’ll likely get it sooner. The IRS expects to issue most refunds in less than 21 days from filing, as it has in recent years.

However, it’s possible that the reduced IRS staffing could cause delays during tax season this year. Other factors could also impact refund timing. The IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills.

How can filing early reduce my tax identity theft risk?

Tax identity theft occurs when someone uses your personal information — such as your Social Security number — to file a fraudulent tax return and claim a refund in your name. One of the simplest yet most effective ways to protect yourself from this type of fraud is to file your tax return as early as possible.

The IRS processes returns on a first-come, first-served basis. Once your legitimate return is in the system, thieves will have a tougher time filing a false return under your identity.

What’s the impact of the paper check phaseout for refunds?

As required by Executive Order 14247, the IRS is phasing out paper tax refund checks for individual taxpayers. For the 2025 tax year, the IRS will request banking information on all tax returns when filed to issue refunds via direct deposit or electronic funds transfer (EFT). For taxpayers without bank accounts, options such as prepaid debit cards, digital wallets or limited exceptions will be available.

Direct deposits and EFTs generally speed up refunds. They also avoid the risk that a paper check could be lost, stolen or returned to the IRS as undeliverable.

If I file early and owe tax, will I have to pay it when I file?

Even if you file early, your deadline for paying tax owed is April 15. However, if you didn’t pay enough in withholding and estimated tax payments for 2025 to meet certain rules (or didn’t make estimated tax payments on time), you could still owe penalties and interest. Paying before April 15 may reduce them.

What if I can’t pay my tax bill in full by April 15?

If you don’t pay what you owe by April 15, you’ll likely be subject to penalties and interest even if you met the withholding and estimated tax payment requirements for 2025. You should still file your return on time (or file for an extension) because there are failure-to-file penalties in addition to failure-to-pay penalties.

Paying as much as possible by April 15 will reduce interest and penalties because a smaller amount will be outstanding. Then request an installment payment plan for the rest of the liability.

Under what circumstances can I file for extension?

Generally, anyone is eligible to file an automatic extension to October 15 for individual tax returns; you don’t have to provide a reason why you can’t file on time. But you must file Form 4868 to request the extension by April 15 to avoid being subject to a failure-to-file penalty.

Remember that an extension of time to file your return doesn’t grant you any extension of time to pay your taxes. You should estimate and pay any taxes owed by April 15 to help avoid, or at least minimize, late payment penalties and interest.

What should I do next?

Contact us to answer any other tax filing questions you have or to discuss getting started on your 2025 return. We can prepare your return accurately and on time while helping to ensure you claim all the tax breaks you’re entitled to.

Important 2026 tax figures for businesses

Management Advisory Services & Business Consulting|February 10, 2026

A new year brings many new tax-related figures for businesses. Here’s an overview of key figures for 2026. Be aware that exceptions or additional rules or limits may apply.

Depreciation-related tax breaks

Bonus depreciation: 100%
Section 179 expensing limit: $2.56 million
Section 179 phaseout threshold: $4.09 million

Qualified retirement plan limits

401(k), 403(b) and 457 plan deferrals: $24,500
401(k), 403(b) and 457 plan catch-up contributions for those age 50 or older: $8,000
401(k), 403(b) and 457 plan additional catch-up contributions for those age 60, 61, 62 or 63: $3,250
SIMPLE deferrals: $17,000
SIMPLE catch-up contributions for those age 50 or older: $4,000
SIMPLE additional catch-up contributions for those age 60, 61, 62 or 63: $1,250
Contributions to defined contribution plans: $72,000
Annual benefit limit for defined benefit plans: $290,000
Compensation defining highly compensated employee: $160,000
Compensation defining key employee (officer) in a top-heavy plan: $235,000
Compensation triggering Simplified Employee Pension contribution requirement: $800

Other benefits limits

Health Savings Account (HSA) contributions: $4,400 for individuals, $8,750 for family coverage
Health Flexible Spending Account (FSA) contributions: $3,400
Health FSA rollover: $680
Child and dependent care FSA contributions: $7,500
Employer contributions to Trump account: $2,500
Monthly commuter highway vehicle and transit pass: $340
Monthly qualified parking: $340

Miscellaneous business-related limits

Income range over which the Section 199A qualified business income deduction limitations phase in: $201,750 – $276,750 (double those amounts for married couples filing jointly)
Threshold for the excess business loss limitation: $256,000 (double that amount for joint filers) — note that this is a reduction from 2025
Limitation on the use of the cash method of accounting: $32 million (also affects other tax items, such as the exemption from the 30% interest expense deduction limit)

Planning for 2026

We can help you factor these changes and others into your 2026 tax planning. Contact us to get started.

A new year means new tax figures for individuals

Estate & Wealth Transfer Planning|February 3, 2026

Many tax figures are annually adjusted for inflation and typically increase each year (or at least every few years). For 2026, some additional changes are going into effect under the One Big Beautiful Bill Act, signed into law July 4, 2025. Here’s an overview of some important limits and other tax figures for 2026. Keep in mind that exceptions or additional rules or limits may apply.

Standard deduction

Single and married filing separately: $16,100
Head of household: $24,150
Married couples filing jointly: $32,200
Additional standard deduction for those age 65 or older and/or blind: $2,050 ($1,650 per spouse if married). For taxpayers both 65 or older and blind, the additional deduction is doubled.

Itemized deduction limits

Casualty loss deduction: only for eligible losses from federally or (new for 2026) state-declared disasters
Charitable deduction floor (new for 2026): 0.5% of adjusted gross income (AGI)
Mortgage interest deduction: interest on qualified debt up to $750,000
Medical expense deduction floor: 7.5% of AGI
State and local tax deduction: $40,400
Overall limit for higher-income taxpayers (new for 2026): Generally, the tax benefit from itemized deductions for taxpayers in the 37% bracket will be as if they were in the 35% bracket

Retirement plan limits

Traditional and Roth IRA contributions: $7,500
Traditional and Roth IRA catch-up contributions for those age 50 or older: $1,100
401(k), 403(b) and 457 plan deferrals: $24,500
401(k), 403(b) and 457 plan catch-up contributions for those age 50 or older: $8,000
401(k), 403(b) and 457 plan additional catch-up contributions for those age 60, 61, 62 or 63: $3,250
SIMPLE deferrals: $17,000
SIMPLE catch-up contributions for those age 50 or older: $4,000
SIMPLE additional catch-up contributions for those age 60, 61, 62 or 63: $1,250
Contributions to defined contribution plans: $72,000
Annual benefit limit for defined benefit plans: $290,000

Other tax-advantaged savings limits

Health Savings Account (HSA) contributions: $4,400 for individuals, $8,750 for family coverage
Health Flexible Spending Account (FSA) contributions: $3,400
Child and dependent care FSA contributions: $7,500
Trump account contributions: $5,000

Estate planning

Gift and estate tax exemption: $15 million
Generation-skipping transfer tax exemption: $15 million
Annual gift tax exclusion: $19,000 (unchanged from 2025)

2026 tax planning

These are only some of the figures and limits that could affect your 2026 taxes. To learn more and begin planning for the new year, contact us.

Not all “business” expenses are tax deductible

Management Advisory Services & Business Consulting|January 29, 2026

Valuation professionals often use discounted cash flow (DCF) techniques to determine the value of a business or estimate economic losses. A critical input in a DCF model is the cost of capital — the rate that’s used to discount future earnings to today’s dollars. Modest changes in this rate can have a major impact on the expert’s conclusion, so it’s important to get it right.

Financing options

The cost of capital represents the expected rate of return that the market requires to attract funds to a particular investment. It’s based on the perceived risk of the investment. All else equal, as risk increases, the discount rate rises, and the value of the business or investment falls (and vice versa).

The cost of capital depends in part on whether the business is financed with 100% equity or a combination of equity and debt. In most cases, debt financing costs less than equity capital. Why? Debt holders receive regular economic benefits (principal and interest payments). But equity investors receive dividends only at management’s discretion, and they must wait until a sale to receive any capital appreciation, making their returns inherently less certain and thus the cost of equity higher.

Estimating the cost of equity

Several market-based components can be used to estimate the cost of equity. These typically include:

A risk-free rate, based on U.S. Treasury securities,
A market risk premium, based on historical returns for a stock index over the risk-free rate, and
A company-specific risk premium, based on the subject company’s financial performance, industry and other attributes.

The cost of equity is used as the cost of capital when the subject company is financed entirely with equity or when the valuation expert discounts earnings available only to equity investors.

Calculating the WACC

When discounting the earnings available to both equity investors and creditors, valuators typically use a weighted average cost of capital (WACC). This rate incorporates the costs of both equity and debt financing, based on an assumed capital structure.

The cost of debt is generally derived from market-based borrowing rates available to the subject company, taking into account credit risk, collateral and prevailing lending conditions. As leverage increases, creditors typically demand higher interest rates to compensate for incremental risk. Interest expense is generally tax-deductible, which reduces the effective cost of debt. But valuators must consider current limitations on interest deductibility, particularly for larger companies subject to earnings-based caps under current tax law.

Selecting the appropriate capital structure

When using WACC as the discount rate, a valuator can choose various capital structures. What’s appropriate depends on the characteristics of the company and the applicable valuation standard.

For example, an expert might apply the subject company’s historical or expected percentages of debt and equity capital when valuing a business interest that lacks control over financing decisions. Alternatively, an expert might choose an industry average capital structure when calculating lost profits or valuing a controlling interest in the business.

What’s appropriate for your situation?

The cost of capital is a critical input in DCF models. The appropriate rate is determined on a case-by-case basis, depending on the facts and circumstances. Contact us for more information on developing and supporting cost of capital assumptions in today’s uncertain marketplace.

New deduction for QPP can save significant taxes for manufacturers and similar businesses

Management Advisory Services & Business Consulting|January 22, 2026

The One Big Beautiful Bill Act (OBBBA) allows 100% first-year depreciation for nonresidential real estate that’s classified as qualified production property (QPP). This new break is different from the first-year bonus depreciation that’s available for assets such as tangible property with a recovery period of 20 years or less and qualified improvement property with a 15-year recovery period. Normally, nonresidential buildings must be depreciated over 39 years.

What is QPP?

The statutory definition of QPP is a bit complicated:

QPP is the portion of any nonresidential real estate that’s used by the taxpayer (your business) as an integral part of a qualified production activity.
A qualified production activity is the manufacturing, production or refining of a qualified product.
A qualified product is any tangible personal property that isn’t a food or beverage prepared in the same building as a retail establishment in which the property is sold. (So a restaurant building can’t be QPP.)

In addition, an activity doesn’t constitute manufacturing, production or refining of a qualified product unless the activity results in a substantial transformation of the property comprising the product.

To sum up these rules, QPP generally means factory buildings. But additional rules apply.

Meeting the placed-in-service rules

QPP 100% first-year depreciation is available for property whose construction begins after January 19, 2025, and before 2029. The property generally must be placed in service in the United States or a U.S. possession before 2031. In addition, the original use of the property generally must commence with the taxpayer.

There’s an exception to the original-use rule. The QPP deduction can be claimed for a previously used nonresidential building that:

Is acquired by the taxpayer after January 19, 2025, and before 2029,
Wasn’t used in a qualified production activity between January 1, 2021, and May 12, 2025,
Wasn’t used by the taxpayer before being acquired,
Is used by the taxpayer as an integral part of a qualified production activity, and
Is placed in service in the United States or a U.S. possession before 2031.

Also, the IRS can extend the before-2031 placed-in-service deadline for property that otherwise meets the requirements to be QPP if an Act of God (as defined) prevents the taxpayer from placing the property in service before the deadline.

Pitfalls to watch out for

While potentially valuable, 100% first-year deprecation for QPP isn’t without pitfalls:

Leased-out buildings. To be QPP, the building must be used by the taxpayer for a qualified production activity. So, if you’re the lessor of a building, you can’t treat it as QPP even if it’s used by a lessee for a qualified production activity.

Nonqualified activities. You can’t treat as QPP any area of a building that’s used for offices, administrative services, lodging, parking, sales activities, research activities, software development, engineering activities or other functions unrelated to the manufacturing, production or refining of tangible personal property.

Ordinary income recapture rule. If at any time during the 10-year period beginning on the date that QPP is placed in service the property ceases to be used for a qualified production activity, an ordinary income depreciation recapture rule will apply.

IRS guidance expected

QPP 100% first-year depreciation can be a valuable tax break if you have eligible property. However, it could be challenging to identify and allocate costs to portions of buildings that are used only for nonqualifying activities or for several activities, not all of which are qualifying activities. Also, once made, the election can’t be revoked without IRS consent. IRS guidance on this new deduction is expected. Contact us with questions and to learn about the latest developments.

2026 tax calendar

Tax Prep, Planning & Strategy|January 20, 2026

To help make sure you don’t miss any important 2026 deadlines, we’re providing this summary of when various tax-related forms, payments and other actions are due. Please review the calendar and let us know if you have any questions about the deadlines or would like assistance meeting them.

February 2

Businesses: Provide Form 1098, Form 1099-MISC (except for those with a February 17 deadline), Form 1099-NEC and Form W-2G to recipients.

Employers: Provide 2025 Form W-2 to employees.

Employers: Report Social Security and Medicare taxes and income tax withholding for fourth quarter 2025 (Form 941) if all associated taxes due weren’t deposited on time and in full.

Employers: File a 2025 return for federal unemployment taxes (Form 940) and pay tax due if all associated taxes due weren’t deposited on time and in full.

Employers: File 2025 Form W-2 (Copy A) and transmittal Form W-3 with the Social Security Administration.

Individuals: File a 2025 income tax return (Form 1040 or Form 1040-SR) and pay any tax due to avoid penalties for underpaying the January 15 installment of estimated taxes.

February 10

Employers: Report Social Security and Medicare taxes and income tax withholding for fourth quarter 2025 (Form 941) if all associated taxes due were deposited on time and in full.

Employers: File a 2025 return for federal unemployment taxes (Form 940) if all associated taxes due were deposited on time and in full.

Individuals: Report January tip income of $20 or more to employers (Form 4070).

February 17

Businesses: Provide Form 1099-B, 1099-S and certain Forms 1099-MISC (those in which payments in Box 8 or Box 10 are being reported) to recipients.

Employers: Deposit Social Security, Medicare and withheld income taxes for January if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for January if the monthly deposit rule applies.

Individuals: File a new Form W-4 to continue exemption for another year if you claimed exemption from federal income tax withholding in 2025.

March 2

Businesses: File Form 1098, Form 1099 (other than those with a February 2 deadline), Form W-2G and transmittal Form 1096 for interest, dividends and miscellaneous payments made during 2025. (Electronic filers can defer filing to March 31.)

March 10

Individuals: Report February tip income of $20 or more to employers (Form 4070).

March 16

Calendar-year partnerships: File a 2025 income tax return (Form 1065 or Form 1065-B) and provide each partner with a copy of Schedule K-1 (Form 1065) or a substitute Schedule K-1 — or request an automatic six-month extension (Form 7004).

Calendar-year S corporations: File a 2025 income tax return (Form 1120-S) and provide each shareholder with a copy of Schedule K-1 (Form 1120-S) or a substitute Schedule K-1 — or file for an automatic six-month extension (Form 7004). Pay any tax due.

Employers: Deposit Social Security, Medicare and withheld income taxes for February if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for February if the monthly deposit rule applies.

March 31

Employers: Electronically file 2025 Form 1097, Form 1098, Form 1099 (other than those with an earlier deadline) and Form W-2G.

April 10

Individuals: Report March tip income of $20 or more to employers (Form 4070).

April 15

Calendar-year corporations: File a 2025 income tax return (Form 1120) or file for an automatic six-month extension (Form 7004). Pay any tax due.

Calendar-year corporations: Pay the first installment of 2026 estimated income taxes and complete Form 1120-W for the corporation’s records.

Calendar-year trusts and estates: File a 2025 income tax return (Form 1041) or file for an automatic five-and-a-half-month extension (six-month extension for bankruptcy estates) (Form 7004). Pay any tax due.

Employers: Deposit Social Security, Medicare and withheld income taxes for March if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for March if the monthly deposit rule applies.

Household employers: File Schedule H, if wages paid equal $2,800 or more in 2025 and Form 1040 isn’t required to be filed. For those filing Form 1040, Schedule H is to be submitted with the return and is thus extended to the due date of the return.

Individuals: File a 2025 income tax return (Form 1040 or Form 1040-SR) or file for an automatic six-month extension (Form 4868). (Taxpayers who live outside the United States and Puerto Rico or serve in the military outside these two locations are allowed an automatic two-month extension without requesting one.) Pay any tax due.

Individuals: Pay the first installment of 2026 estimated taxes (Form 1040-ES) if not paying income tax through withholding or not paying sufficient income tax through withholding.

Individuals: Make 2025 contributions to a traditional IRA or Roth IRA (even if a 2025 income tax return extension is filed).

Individuals: Make 2025 contributions to a SEP or certain other retirement plans (unless a 2025 income tax return extension is filed).

Individuals: File a 2025 gift tax return (Form 709), if applicable, or file for an automatic six-month extension (Form 8892). Pay any gift tax due. File for an automatic six-month extension (Form 4868) to extend both Form 1040 and Form 709 if no gift tax is due.

April 30

Employers: Report Social Security and Medicare taxes and income tax withholding for first quarter 2026 (Form 941) and pay any tax due if all associated taxes due weren’t deposited on time and in full.

May 11

Employers: Report Social Security and Medicare taxes and income tax withholding for first quarter 2026 (Form 941) if all associated taxes due were deposited on time and in full.

Individuals: Report April tip income of $20 or more to employers (Form 4070).

May 15

Calendar-year exempt organizations: File a 2025 information return (Form 990, Form 990-EZ or Form 990-PF) or file for an automatic six-month extension (Form 8868). Pay any tax due.

Calendar-year small exempt organizations (with gross receipts normally of $50,000 or less): File a 2025 e-Postcard (Form 990-N) if not filing Form 990 or Form 990-EZ.

Employers: Deposit Social Security, Medicare and withheld income taxes for April if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for April if the monthly deposit rule applies.

June 10

Individuals: Report May tip income of $20 or more to employers (Form 4070).

June 15

Calendar-year corporations: Pay the second installment of 2026 estimated income taxes and complete Form 1120-W for the corporation’s records.

Employers: Deposit Social Security, Medicare and withheld income taxes for May if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for May if the monthly deposit rule applies.

Individuals: File a 2025 individual income tax return (Form 1040 or Form 1040-SR) or file for a four-month extension (Form 4868) if you live outside the United States and Puerto Rico or you serve in the military outside those two locations. Pay any tax, interest and penalties due.

Individuals: Pay the second installment of 2026 estimated taxes (Form 1040-ES) if not paying income tax through withholding or not paying sufficient income tax through withholding.

July 10

Individuals: Report June tip income of $20 or more to employers (Form 4070).

July 15

Employers: Deposit Social Security, Medicare and withheld income taxes for June if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for June if the monthly deposit rule applies.

July 31

Employers: Report Social Security and Medicare taxes and income tax withholding for second quarter 2026 (Form 941) and pay any tax due if all associated taxes due weren’t deposited on time and in full.

Employers: File a 2025 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension.

August 10

Employers: Report Social Security and Medicare taxes and income tax withholding for second quarter 2026 (Form 941) if all associated taxes due were deposited on time and in full.

Individuals: Report July tip income of $20 or more to employers (Form 4070).

August 17

Employers: Deposit Social Security, Medicare and withheld income taxes for July if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for July if the monthly deposit rule applies.

September 10

Individuals: Report August tip income of $20 or more to employers (Form 4070).

September 15

Calendar-year corporations: Pay the third installment of 2026 estimated income taxes and complete Form 1120-W for the corporation’s records.

Calendar-year S corporations: File a 2025 income tax return (Form 1120-S) and provide each shareholder with a copy of Schedule K-1 (Form 1120-S) or a substitute Schedule K-1 if an automatic six-month extension was filed. Pay any tax, interest and penalties due.

Calendar-year S corporations: Make contributions for 2025 to certain employer-sponsored retirement plans if an automatic six-month extension was filed.

Employers: Deposit Social Security, Medicare and withheld income taxes for August if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for August if the monthly deposit rule applies.

Individuals: Pay the third installment of 2026 estimated taxes (Form 1040-ES), if not paying income tax through withholding or not paying sufficient income tax through withholding.

September 30

Calendar-year trusts and estates: File a 2025 income tax return (Form 1041) if an automatic five-and-a-half-month extension was filed. Pay any tax, interest and penalties due.

October 13

Individuals: Report September tip income of $20 or more to employers (Form 4070).

October 15

Calendar-year bankruptcy estates: File a 2025 income tax return (Form 1041) if an automatic six-month extension was filed. Pay any tax, interest and penalties due.

Calendar-year C corporations: File a 2025 income tax return (Form 1120) if an automatic six-month extension was filed and pay any tax, interest and penalties due.

Calendar-year C corporations: Make contributions for 2025 to certain employer-sponsored retirement plans if an automatic six-month extension was filed.

Employers: Deposit Social Security, Medicare and withheld income taxes for September if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for September if the monthly deposit rule applies.

Individuals: File a 2025 income tax return (Form 1040 or Form 1040-SR) if an automatic six-month extension was filed (or if an automatic four-month extension was filed by a taxpayer living outside the United States and Puerto Rico or serving in the military outside those two locations). Pay any tax, interest and penalties due.

Individuals: Make contributions for 2025 to certain existing retirement plans or establish and contribute to a SEP for 2025 if an automatic six-month extension was filed.

Individuals: File a 2025 gift tax return (Form 709), if applicable, and pay any tax, interest and penalties due if an automatic six-month extension was filed.

November 2

Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2026 (Form 941) and pay any tax due if all associated taxes due weren’t deposited on time and in full.

November 10

Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2026 (Form 941) if all associated taxes due were deposited on time and in full.

Individuals: Report October tip income of $20 or more to employers (Form 4070).

November 16

Calendar-year exempt organizations: File a 2025 information return (Form 990, Form 990-EZ or Form 990-PF) if a six-month extension was filed. Pay any tax, interest and penalties due.

Employers: Deposit Social Security, Medicare and withheld income taxes for October if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for October if the monthly deposit rule applies.

December 10

Individuals: Report November tip income of $20 or more to employers (Form 4070).

December 15

Calendar-year corporations: Pay the fourth installment of 2026 estimated income taxes and complete Form 1120-W for the corporation’s records.

Employers: Deposit Social Security, Medicare and withheld income taxes for November if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for November if the monthly deposit rule applies.

Changes to charitable donation deductions are on the horizon

Tax Prep, Planning & Strategy|January 20, 2026

Beginning in 2026, individuals who itemize deductions and donate to charity will face a new limit on their charitable deductions. And in some cases, they’ll face two new limits. But there’s some good news for nonitemizing individuals who make charitable donations.

New charitable deduction floor

Under the One Big Beautiful Bill Act (OBBBA), starting in 2026, if you itemize deductions, your otherwise allowable charitable deduction will be reduced by 0.5% of your adjusted gross income (AGI). Put another way, your 2026 charitable deduction will be limited to the amount that exceeds 0.5% of your 2026 AGI.

AGI includes all taxable income items and is reduced by above-the-line deductions like the write-offs for traditional IRA contributions, self-employed retirement plan contributions, self-employed health insurance premiums, 50% of self-employment tax, qualified education loan interest expense and Health Savings Account contributions.

Let’s look at an example: You and your spouse file jointly in 2026. Your AGI is $400,000 and you make charitable donations of $10,000. Your allowable itemized charitable deduction for 2026 is limited to $8,000 [$10,000 − (0.5% × $400,000)].

New itemized deduction limitation

Also under the OBBBA, beginning in 2026, itemized deductions — including charitable deductions — for individuals in the top federal income tax bracket of 37% will be reduced by the lesser of: 1) 2/37 times the amount of otherwise allowable itemized deductions, or 2) 2/37 times the amount of taxable income (before considering those deductions) in excess of the applicable threshold for the 37% tax bracket.

That sounds complicated, but generally the limitation will mean that the tax benefit of itemized deductions for taxpayers in the 37% bracket will be as if they were in the 35% bracket.

When a taxpayer has charitable deductions, the charitable deduction floor rule will be applied before the itemized deduction limitation. However, only high-income individuals will be affected by the itemized deduction limitation.

Planning tips for 2025 and beyond

If you’ll itemize this year and next, consider advancing some charitable donations that you normally would make in 2026 into this year to avoid the impact of the new 0.5%-of-AGI charitable deduction floor that will take effect next year.

In future years, consider taking steps to reduce your AGI to minimize the impact of the charitable deduction floor. For instance, you can recognize capital losses from securities held in taxable brokerage accounts and make bigger deductible or pretax retirement plan contributions.

Another option is to bunch your charitable giving into alternating years. For example, instead of donating $10,000 to charity every year, donate $20,000 every other year. Because the charitable deduction reduction is based on AGI, not the amount of the deduction, you can increase your tax benefit with this strategy (assuming your AGI is steady from year to year).

In the previous example, if you make $10,000 in donations in 2026 and another $10,000 in 2027 and your AGI remains at $400,000 for both years, each year your deduction will be reduced by $2,000, for a total deduction over two years of $16,000. But if you bunch your donations into 2027, your 2027 $20,000 deduction will be reduced by that same $2,000. You won’t have an itemized charitable deduction for 2026, but your total deduction for the two-year period will be $18,000.

It’s important to review your overall tax picture before implementing a bunching strategy. For example, if not being able to claim an itemized charitable deduction on your 2026 income tax return would push you into a higher income tax bracket, then bunching may not be beneficial.

New charitable deduction for nonitemizers

If you don’t have enough total itemized deductions — including charitable donations — to exceed your standard deduction, you’ll save more tax by claiming the standard deduction. In recent years, including 2025, nonitemizers haven’t been allowed to deduct any charitable contributions.

But starting in 2026, the OBBBA reinstates the COVID-era deduction for cash donations by nonitemizers, subject to an increased annual limit of $1,000, or $2,000 for joint filers. (The limits were $300 and $600, respectively, for 2021 when this nonitemizer deduction was last available.)

The definition of “cash contribution” may be broader than you think. It includes gifts made by debit or credit card, check, ACH, online payment platform, and payroll deduction. But be aware that this deduction doesn’t reduce your AGI.

This year and next

Limits to charitable deductions are nothing new. Limits beyond the ones discussed here have long applied. For example, only donations to qualified charities are eligible, proper substantiation is required, and other AGI-based limits apply in certain situations. Contact us to discuss what you can deduct on your 2025 return, last-minute 2025 planning opportunities and your 2026 donation strategy.

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Changes to charitable donation deductions are on the horizon

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Weyrich Cronin Sorra

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