If your favorite tax person has been ignoring your calls, emails and silly memes about now, they should be forgiven–they’re likely head down working on tax returns on extension. This year, with an extension, individual taxpayers have until October 15, 2025, to timely file a return.
(Remember that an extension is an extension of the time to file and not an extension of time to pay. If you expect to owe, you should have made a payment with your extension request to avoid interest and penalty later–the due date for paying your taxes was April 15, 2025, even for taxpayers on an extension.)
Traditionally, about 10 million taxpayers file extensions, but that number appears to be climbing. Last year, the IRS estimated that 19 million individual taxpayers would file for an extension. The tax agency didn’t publish an estimate for 2025, but it’s likely that the numbers will be similar.
So, give your favorite tax person a little grace on the missed calls and emails (I’m not so sure about the missed silly memes–those should always be acknowledged).
And even though we’re still talking about 2024 tax year returns, as wild as it sounds, the 2026 tax filing season is right around the corner. The IRS recently released a draft of the new Schedule 1-A, Additional Deductions for 2025–for the returns that you’ll file in 2026. The form was created to calculate new temporary deductions for tips, overtime, car interest, and seniors under the One Big Beautiful Bill Act (OBBBA). You can see it here.
And while the IRS said that there will be no changes to Form W-2 for the tax year 2025, there will be changes to Form W-2 for the tax year 2026. You can get a first look here.
(If you’re already looking ahead to the 2026 tax year–those returns you’ll file in 2027–you can check out the 2026 tax bracket and other projections from Bloomberg Tax & Accounting. You can find the predicted penalties for late returns, tax delinquencies, and missed forms and returns here.)
The IRS continues to roll out drafts of some 2026 tax forms, including a draft of Form W-9, Request for Taxpayer Identification Number and Certification. There are two key updates for the draft Form W-9, including direction that sole proprietors must use their Social Security Number and disregarded entities must use the owner’s taxpayer identification number (TIN). This is true even if you are a single-member LLC (SMLLC) that is disregarded as an entity separate from its owner, and even if you have an Employer Identification Number (EIN) for the LLC. You are not to report the EIN of the sole proprietorship or disregarded entity.
There is also a new category of exempt recipient for sales of digital assets, clearly a nod to the new Form 1099-DA. Part II (Certification) of Form W-9 adds a checkbox to facilitate a broker obtaining certification from another broker that they are U.S. digital asset broker, as defined in the Regulations. (You may recall that Notice 2024—56 teased that this information would appear on the revised Form W-9).
You can read more and get a first look at the draft Form W-9 here.
The IRS also released significant new guidance in the form of Proposed Regulations related to the deductions for tipped workers. While informal guidance, including a look at the infamous “traditionally tipped occupations list,” was made available previously, the proposed regulations offer more formal guidance, including answering some questions that tax professionals have posed to Treasury.
Treasury has confirmed that the deduction is capped at $25,000 per return, not per taxpayer. That means that a married couple may not simply double the deduction, even if both taxpayers are tipped employees. (My colleague, Peter Reilly, was one of the first to note the odd marriage penalties in OBBBA, and wrote about Treasury’s take here.)
The proposed regulations also address questions about relatively new occupations, including digital content creators. According to the list, streamers, podcasters, social media influencers, and other online entertainers who receive voluntary payments from followers may qualify, provided they otherwise meet the statutory requirements.
And despite some initial confusion, the Treasury has now confirmed that qualified tips do not include those received in connection with illegal activity, defined as a felony or misdemeanor under applicable law, including performing services in human trafficking, exotic pet smuggling, counterfeiting or fencing stolen goods, drug trafficking, drug dealing, and unlicensed sales that violate the applicable law.
Qualified tips also don’t include tips associated with prostitution or pornography. What, exactly, qualifies as pornography? While Justice Potter Stewart declared, “I know it when I see it” to describe the test for obscenity in Jacobellis v. Ohio, the IRS will likely have its own set of criteria—we’ll have to wait and see. Chances are, though, that some online accounts, including some on OnlyFans, will be disqualified.
An updated list of occupations—and codes to be used for reporting—is included in the proposed regulations. You can read more about it below, as well as get a first look at some of the data that the IRS relied on to come up with the list.
And there’s more! The Treasury and the IRS have issued final regulations on SECURE 2.0 Act provisions related to catch-up contributions. Catch-up contributions are exactly what they sound like: additional tax-favored contributions to retirement plans for employees who have reached age 50 (or more).
The biggest takeaway? Under the SECTION 2.0 Act, employees who are aged 50 or older with previous year FICA wages of $145,000 or more (indexed for inflation) must treat catch-up contributions to section 401(k), 403(b), or governmental 457(b) plans as after-tax Roth contributions. The final regulations make clear that provisions relating to the Roth catch-up requirements generally apply to contributions in taxable years beginning after December 31, 2026—meaning the 2027 tax year. Since the mandatory part of the rule doesn’t kick in until 2027, plans may continue to permit catch-up contributions as before (pre-tax or Roth), even for those who exceed the income threshold. In other words, for now, the plans don’t have to change—but they can.
I expect that tax news, including changes related to OBBBA and those related to the upcoming filing season, will continue to make news as we approach the end of year. But, there’s no need to worry–at Forbes, we’ve got you covered.
Enjoy your weekend,
Kelly Phillips Erb (Senior Writer, Tax)
Questions
This week, a reader asks:
Last year, I donated to several causes. Can I deduct those, and do I need receipts?
So, the short answer is yes: You can typically deduct charitable donations.
Here’s the longer “but only” answer. You can typically deduct your charitable donations, but only if you itemize deductions on Schedule A of Form 1040. Additionally, your donations must be made to a qualifying tax-exempt organization–you can check status on the IRS website, but keep in mind that some religious organizations like churches, synagogues, and mosques have automatic tax-exempt status and may not be on the list. Gifts to individuals and most foreign organizations aren’t deductible, no matter how well-deserving the recipient might be.
The value of the gift may affect how much you can claim as a deduction. For example, if you donate something other than cash, you can generally deduct the fair market value (FMV) of the property at the time of the contribution (some special rules apply). And your deduction for charitable contributions generally can’t be more than 60% of your adjusted gross income, or AGI (but in some cases, 20%, 30%, or 50% limits may apply).
As for those receipts? You should always keep receipts (it’s just great practice), but there are also some bright-line rules to follow. Here’s a quick look:
- For any cash donation, you need a bank record, a credit card statement, or a written acknowledgement from the charity.
- For donations of $250 or more, the IRS requires a written acknowledgment from the organization that states the amount, date, and whether you received anything in return.
- For non-cash donations—like clothing, furniture, or cars—you’ll generally need a receipt, and if the value is over $500, you must also file Form 8283. Additionally, you typically must complete Section B of Form 8283 for each item—or group of similar non-cash items— for which you claim a deduction of over $5,000, and the organization that received the property must also complete and sign the form.
(Always check with your tax professional if you have questions.)
One quick note: Under OBBBA, the charitable deduction has been expanded to include a permanent deduction for taxpayers who do not itemize. Beginning in 2026, taxpayers who do not itemize can claim a deduction of up to $1,000 ($2,000 for taxpayers who are married filing jointly) for charitable contributions. The “normal” rules for charitable giving typically apply, but you cannot claim the deduction for contributions to donor-advised funds.OBBBA also creates a 0.5% floor on charitable contributions for taxpayers who itemize. A floor is a baseline that you have to exceed to benefit from the deduction (the medical expense deduction also has a floor). In this case, taxpayers who itemize can only deduct the amounts over 0.5% of their adjusted gross income (AGI). Here’s a quick example: Let’s say your AGI is $100,000 and you donated $1,500. You can deduct $1,000—that’s your $1,500 donation less the floor of $500 ($100,000 x .5%).
And finally, OBBBA also makes the 60% contribution limit for cash gifts permanent.
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Statistics, Charts, and Graphs
To create the traditionally tipped occupations list for purposes of the “no tax on tips” deduction, Treasury and the IRS examined a number of sources, including confidential income tax return data from tax year 2023. Based on prior guidance under the Fair Labor Standards Act (FLSA), Treasury and IRS determined that individuals must have received cash tips more often than occasionally (for example, not only on holidays or other celebrations) for their occupation to be considered as having customarily and regularly received tips on or before December 31, 2024. These occupations were primarily in the service industry, and the taxpayers either interacted with customers or commonly participated in tip-sharing arrangements with individuals who interacted with customers.
The Treasury and the IRS also used income tax return data to identify qualifying occupations. This data includes reported tips from Form W-2 and Form 4137, as well as the occupation that the taxpayer self-reported next to the taxpayer’s signature on Form 1040. Why the occupation line? Individuals in some occupations, like rideshare drivers, often operate as independent contractors rather than employees and do not receive Form W-2 or file Form 4137 related to their rideshare activity. Thus, using only the income tax return data would have omitted these occupations, even those taxpayers received tips.
The data was used to create a series of charts which summarize taxpayer information from Tax Year 2023 on employees who have a single job–meaning they received only one Form W-2, did not file Schedule C (for self-employed persons) or Schedule F (for farmers), and did not have non-passive income from a partnership or an S-corporation on Schedule E.
The charts illustrate the percentage of individuals within the defined occupation who have at least $100 of tips reported on Form W-2 or Form 4137. It also shows reported tips as a percent of wage compensation.
I was really struck by the amount of data parsed by the Treasury and the IRS in what is a relatively short amount of time (remember that OBBBA was only signed into law in July). It’s also a lot of work for a temporary deduction–remember, it expires in 2028.
You can read more about the “no tax on tips” deduction and click through to the Proposed Regs here. The Regs include charts like the one shown above for every category of occupation included in the definition of tips that qualify for the deduction. Trust me, it’s worth the click (admit it, you’re dying to see the stats on pet caretakers and find out why zookeepers didn’t make the list).
A Deeper Dive
Chances are that you’ve been hearing a lot about the state and local tax (SALT) deduction lately. That hasn’t always been the case, so you’d be forgiven for assuming that the deduction is relatively new. Only, that’s not true: the SALT deduction has been a part of the federal income tax from the very beginning. When Congress created the first national income tax during the Civil War, it stipulated that taxes paid to states, localities, and even the federal government itself should be excluded from taxable income. The deduction has been with us ever since.
Of course, Congress has fiddled with the deduction from time to time, especially in recent years. Notably, the Tax Reform Act of 1986 brought important changes to the SALT deduction. Specifically, after a vigorous lobbying campaign, Congress disallowed sales taxes for purposes of the deduction but retained the deductibility of other state and local taxes..
Nearly two decades later, the American Jobs Creation Act of 2004 temporarily restored the sales tax deduction, giving taxpayers the option to deduct sales taxes in lieu of income taxes. Eventually, Congress made this new approach permanent.
In 2017 the Tax Cuts and Jobs Act made another major change to the SALT deduction, imposing a $10,000 cap. At the same time, the TCJA dramatically increased the standard deduction, roughly doubling the value. As a result, the number of taxpayers who itemized (and thus could claim the SALT deduction) fell from 31% in 2017 to 9% in 2021. While the benefits of the SALT deduction had long been skewed toward higher-income taxpayers, that distribution was accentuated after 2017.
Fast-forward to 2025 and the One Big Beautiful Bill Act (OBBBA). Congress eventually agreed to raise the cap from $10,000 to $40,000, while also providing for annual 1% increases each year through 2029. OBBBA also limited the deduction for wealthy taxpayers and provided that the cap would reset to $10,000 in 2030.
What’s next? Fights over the SALT deduction are certainly not over–the scheduled return of the $10,000 cap will all but guarantee a new round of discussions.
Tax Filings And Deadlines
📅 September 15, 2025. Third quarter estimated payments due for individual taxpayers.
📅 September 30, 2025. Due date for individuals and businesses impacted by recent terrorist attacks in Israel.
📅 October 15, 2025. Due date for individuals and businesses affected by wildfires and straight-line winds in southern California that began on January 7, 2025.
📅 November 3, 2025. Due date for individuals and businesses affected by storms in Arkansas, Kentucky, and Tennessee that began on April 2, 2025.
Tax Conferences And Events
📅 September 26-27, 2025. National Association of Tax Professionals Philadelphia Tax Forum. Sheraton Philadelphia Downtown, Philadelphia, Pennsylvania. Registration required.
📅 October 3-4, 2025. National Association of Tax Professionals Dallas Tax Forum. Omni Dallas, Dallas, Texas. Registration required.
Trivia
There’s a lot of focus right now on the hospitality industry. Which state saw the most travel spending in 2024?
(A) California
(B) Florida
(C) Nevada
(D) New York
Find the answer at the bottom of this newsletter.
Positions And Guidance
The IRS has published Internal Revenue Bulletins 2025-38 and 2025-39.
The American Bar Association (ABA) Section of Taxation submitted feedback to the IRS on Form 14039, Identity Theft Affidavit, with respect to identity theft. The section’s suggestions include increasing the font size and the amount of space available for responses, as well as other formatting issues. They also recommend allowing tax practitioners to submit the form through their Tax Pro Accounts, clarifying why information about the taxpayer’s last tax return is needed (as well as providing an opt-out), and permitting tax professionals to submit the form on behalf of someone who is not able to complete the form themselves.
The American Bar Association (ABA) Section of Taxation submitted comments to the IRS regarding the administration of Section 41, including comments on the Revised IRS Form 6765, Credit for Increasing Research Activities, and related instructions. The Section’s recommendations are aimed at reducing administrative costs through reducing the examination burden by providing more objective standards for review of claims and providing simplified rules and procedures; freeing up taxpayer resources to focus on domestic research and development (“R&D”); and increasing America’s competitiveness for R&D projects—as many foreign jurisdictions also provide valuable research incentives as well as simplified administrative and compliance procedures.
The American Institute of CPAs (AICPA) submitted a letter to the Treasury and the IRS requesting the improvement of Forms 1041, 1041-A, and 1041-NR used by estates and trusts. Their letter notes that Forms 1041 and 706 lack fields for direct deposit information and there is no ability to use IRS Direct Pay. The AICPA also suggests that the IRS permit electronically transmitting Schedules K-1 (Form 1041) to beneficiaries.
Noteworthy
BDO USA, an accounting and advisory firm, announced plans to add more than 1,300 employees, including 30 principals, from HORNE LLP, a professional services firm serving clients across the country with presence in seven states, the District of Columbia, and Puerto Rico. The transaction is expected to close on November 1, 2025, subject to customary regulatory approval and closing conditions.
The National Association of State Treasurers announced elections to the following executive positions of leadership as of January 1, 2026: Hon. Rachael Eubanks, Michigan (President); Hon. Daniel Elliott, Indiana (Senior Vice President); and Hon. Erick Russell, Connecticut (Secretary-Treasurer). The following State Treasurers will serve one-year terms on the NAST Board of Directors: Hon. Stacy Garrity, Pennsylvania (Eastern Vice President); Hon. Steven Johnson, Kansas (Midwestern Vice President); Hon. David Richardson, Virginia (Southern Vice President); and Hon. Laura Montoya, New Mexico (Western Vice President).
Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) reintroduced the Billionaires Income Tax Act, legislation that would help ensure billionaires pay “a fair share in taxes every year just like Americans who work for a living already do.” Congressman Steve Cohen (Tenn.-9), and Congressman Don Beyer (Va.-8) introduced identical legislation in the House of Representatives, making this the first Congress in which the Billionaires Income Tax is a bicameral proposal.
Institute on Taxation and Economic Policy, a non-profit, non-partisan tax policy organization, released a new brief that details how the Inflation Reduction Act’s boost to IRS enforcement funding has largely disappeared.
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If you have tax and accounting career or industry news, submit it for consideration here or email me directly.
In Case You Missed It
Here’s what readers clicked through most often in the newsletter last week:
- Projected 2026 Tax Brackets, Rates And Deductions. Here’s What To Know
- A First Look At The New Tax Form For Claiming Deductions For Tips, Overtime, Car Interest And Seniors
You can find the entire newsletter here.
Trivia Answer
The answer is (A) California.
While we hear a lot about the Nevada hospitality industry, the Silver State reported $51.5 billion in travel spending in 2024, placing it fourth. That beat its own previous record, but didn’t come close to California’s record $150.4 billion for the year. Florida came in second with $131 billion (Orlando alone accounted for $58.5 billion, thanks to Walt Disney World Resort, Universal Orlando Resorts and SeaWorld). New York landed in third place with $88 billion in travel spending.
Feedback
How did we do? We’d love your feedback. If you have a suggestion for making the newsletter better, submit it here or email me directly.