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Future Developments
Publication 554
Tax Guide
for Seniors
For use in preparing
2025 Returns
For the latest information about developments related to
Pub. 554, such as legislation enacted after it was
published, go to IRS.gov/Pub554.
What’s New
Enhanced deduction for seniors. Beginning in 2025,
taxpayers who are age 65 or older may be eligible for the
enhanced deduction for seniors. The maximum amount of
the deduction is $6,000 per person ($12,000 if married filing jointly and both spouses are eligible). For more information, see Enhanced Deduction for Seniors, later.
Standard deduction amount increased. For 2025, the
standard deduction amount has been increased for all filers. The amounts are:
• Single or Married filing separately—$15,750;
• Married filing jointly or Qualifying surviving
spouse—$31,500; and
• Head of household—$23,625.
Alternative minimum tax (AMT) exemption increased.
The AMT exemption amount has increased to $88,100
($137,000 if married filing jointly or qualifying surviving
spouse; $68,500 if married filing separately).
Earned income credit. The maximum amount of income
you can earn and still get the credit has changed. You may
be able to take the credit if you earn less than:
• $19,104 ($26,214 if married filing jointly), don’t have a
qualifying child, and are at least 25 years old and under age 65;
• $50,434 ($57,554 if married filing jointly), and you
have one qualifying child;
• $57,310 ($64,430 if married filing jointly), and you
have two qualifying children; or
• $61,555 ($68,675 if married filing jointly), and you
have three or more qualifying children.
For more information, see Earned Income Credit, later.
Standard mileage rate. For 2025, the standard mileage
rate allowed for operating expenses for a car when you
use it for medical reasons is 21 cents a mile.
Reminders
Get forms and other information faster and easier at:
• IRS.gov (English)
• IRS.gov/Spanish (Español)
• IRS.gov/Chinese (中文)
Jan 16, 2026
• IRS.gov/Korean (한국어)
• IRS.gov/Russian (Pусский)
• IRS.gov/Vietnamese (Tiếng Việt)
Increase in required minimum distribution age. If you
reach age 72 in 2023 or later and have funds in a traditional IRA or a traditional SIMPLE IRA, the required beginning date for your first required minimum distribution is
April 1 of the year following the year in which you reach
age 73.
Maximum age for traditional IRA contributions. The
age restriction for contributions to a traditional IRA has
been eliminated.
Publication 554 (2025) Catalog Number 15102R
Department of the Treasury Internal Revenue Service www.irs.gov
Qualified disaster tax relief. Special rules provide for
tax-favored withdrawals and repayments from certain retirement plans for taxpayers who suffered economic loss
as a result of a qualified disaster. See Form 8915-F, Qualified Disaster Retirement Plan Distributions and Repayments, for more information.
Form 1040-SR. Form 1040-SR, U.S. Income Tax Return
for Seniors, was introduced in 2019. You can use this form
if you are age 65 or older at the end of 2025. The form
generally mirrors Form 1040. However, the Form 1040-SR
has larger text and some helpful tips for older taxpayers.
See the Instructions for Form 1040 for more information.
Tax return preparers. Choose your preparer carefully. If
you pay someone to prepare your return, the preparer is
required, under the law, to sign the return and fill in the
other blanks in the Paid Preparer Use Only section of your
return. Remember, however, that you are still responsible
for the accuracy of every item entered on your return. If
there is any underpayment, you are responsible for paying
it, plus any interest and penalty that may be due.
Third party designee. You can check the “Yes” box in
the Third Party Designee area of your return to authorize
the IRS to discuss your return with your preparer, a friend,
a family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the
processing of your return. It also allows your designee to
perform certain actions. See your income tax return instructions for details.
Employment tax withholding. Your wages are subject
to withholding for income tax, social security tax, and
Medicare tax even if you are receiving social security benefits.
Social security benefits information. Social security
beneficiaries may quickly and easily obtain various information from the Social Security Administration’s (SSA’s)
website with a my Social Security account, including getting a replacement Form SSA-1099 or SSA-1042S. For
more information, go to SSA.gov/myaccount. See Obtaining social security information, later.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs
and
calling
1-800-THE-LOST
(1-800-843-5678) if you recognize a child.
Introduction
The purpose of this publication is to provide a general
overview of selected topics that are of interest to older taxpayers. This publication will help you determine if you
need to file a return and, if so, what items to report on your
return. Each topic is discussed only briefly, so you will find
references to other free IRS publications that provide
more detail on these topics if you need it.
2
Table I has a list of questions you may have about filing
your federal tax return. To the right of each question is the
location of the answer in this publication. Also, at the back
of this publication, there is an index to help you search for
the topic you need.
While most federal income tax laws apply equally to all
taxpayers, regardless of age, there are some provisions
that give special treatment to older taxpayers. The following are some examples.
• Higher gross income threshold for filing. You must
be age 65 or older at the end of the year to get this
benefit. You are considered age 65 on the day before
your 65th birthday. Therefore, you are considered age
65 at the end of the year if your 65th birthday is on or
before January 1 of the following year.
• Higher standard deduction. If you don’t itemize de-
ductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year.
You are considered age 65 at the end of the year if
your 65th birthday is on or before January 1 of the following year.
• Enhanced deduction for seniors. If you are age 65
or older at the end of the year, you may be eligible for
the enhanced deduction for seniors. You are considered age 65 at the end of the year if your 65th birthday
is on or before January 1 of the following year. To determine if you qualify and how to figure this deduction,
see Enhanced Deduction for Seniors, later.
• Credit for the elderly or the disabled. If you qualify,
you may benefit from the credit for the elderly or the
disabled. To determine if you qualify and how to figure
this credit, see Credit for the Elderly or the Disabled,
later.
Return preparation assistance. The IRS wants to make
it easier for you to file your federal tax return. You may find
it helpful to visit a Volunteer Income Tax Assistance
(VITA), Tax Counseling for the Elderly (TCE), or American
Association of Retired Persons (AARP) Foundation
Tax-Aide site near you.
Volunteer Income Tax Assistance and Tax Counseling for the Elderly. These programs provide free help
for low-income taxpayers and taxpayers age 60 or older to
prepare and file their returns. For the VITA/TCE site nearest you, contact your local IRS office. For more information, see Preparing and filing your tax return under How To
Get Tax Help, later.
AARP Foundation Tax-Aide. This program offers free
tax preparation and has thousands of locations in neighborhood libraries, malls, banks, community centers, and
senior centers annually during the filing season. Go to
AARP.org/TaxAide
or
call
888-AARP-NOW
(888-227-7669) for more information.
Comments and suggestions. We welcome your comments about this publication and suggestions for future
editions.
You can send us comments through IRS.gov/
FormComments. Or, you can write to the Internal Revenue
Publication 554 (2025)
Service, Tax Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each comment received, we do appreciate your feedback and will
consider your comments and suggestions as we revise
our tax forms, instructions, and publications. Don’t send
tax questions, tax returns, or payments to the above address.
Getting answers to your tax questions. If you have
a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can
get forms and publications faster online.
Table I. What You Should Know About Federal Taxes
Note: The following is a list of questions you may have about filling out your federal income tax return.
To the right of each question is the location of the answer in this publication.
What I should know
Where to find the answer
Do I need to file a return?
See chapter 1.
Is my income taxable or nontaxable?
If it is nontaxable, must I still report it?
How do I report benefits I received from the Social
Security Administration or the Railroad Retirement Board?
Are these benefits taxable?
Must I report the sale of my home?
If I had a gain, is any part of it taxable?
See chapter 2.
See Social Security and Equivalent Railroad Retirement
Benefits in chapter 2.
See Sale of Home in chapter 2.
What are some of the items that I can deduct to reduce my
income?
See chapters 3 and 4.
How do I report the amounts I set aside for my IRA?
See Individual Retirement Arrangement (IRA)
Contributions and Deductions in chapter 3.
Would it be better for me to claim the standard deduction
or itemize my deductions?
See chapter 4.
What are some of the credits I can claim to reduce my tax?
See chapter 5 for discussions on the credit for the elderly
or the disabled, the child and dependent care credit, and
the earned income credit.
Must I make estimated tax payments?
See chapter 6.
How do I contact the IRS or get more information?
See How To Get Tax Help.
Publication 554 (2025)
3
1.
2025 Filing Requirements
If income tax was withheld from your pay, or if you qualify
for a refundable credit (such as the earned income credit,
the additional child tax credit, or the American opportunity
credit), you should file a return to get a refund even if you
aren’t otherwise required to file a return.
Don’t file a federal income tax return if you don’t
TIP meet the filing requirements and aren’t due a re-
fund. If you need assistance to determine if you
need to file a federal income tax return for 2025, go to
IRS.gov/ITA and use the Interactive Tax Assistant (ITA).
General Requirements
If you are a U.S. citizen or resident alien, you must file a
return if your gross income for the year was at least the
amount shown on the appropriate line in Table 1-1. For
other filing requirements, see your tax return instructions
or Pub. 501. If you were a nonresident alien at any time
during the year, the filing requirements that apply to you
may be different from those that apply to U.S. citizens.
See Pub. 519.
Gross income. Gross income is all income you receive
in the form of money, goods, property, and services that
isn’t exempt from tax. If you are married and live with your
spouse in a community property state, half of any income
defined by state law as community income may be considered yours. States with community property laws include
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A registered domestic partner in Nevada, Washington, or California must
generally report half the combined community income of
the individual and their domestic partner. For more information about community property, see Pub. 555.
For more information on what to include in gross income, see chapter 2.
Self-employed persons. If you are self-employed in a
business that provides services (where the production,
purchase,
or
sale
of
merchandise
isn’t
an
Table 1-1. 2025 Filing Requirements Chart for Most Taxpayers
Note: You must file a return if your gross income was at least the amount shown in the last column.
AND at the end of 2025
you were...*
THEN file a return if your gross
income** was at least...
single
under 65
$15,750
65 or older
$17,750
under 65
$23,625
65 or older
$25,625
under 65 (both spouses)
$31,500
65 or older (one spouse)
$33,100
65 or older (both spouses)
$34,700
.
IF your filing status is...
head of household
married filing jointly***
married filing separately
any age
$5
qualifying surviving spouse
under 65
$31,500
65 or older
$33,100
If you were born before January 2, 1961, you are considered to be age 65 or older at the end of 2025. (If your spouse
died in 2025 or if you are preparing a return for someone who died in 2025, see Pub. 501.)
**
“Gross income” means all income you receive in the form of money, goods, property, and services that isn’t exempt
from tax, including any income from sources outside the United States or from the sale of your main home (even if you
can exclude part or all of it). It also includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040).
“Gross income from a business” means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F
(Form 1040), line 9. However, in figuring gross income, don’t reduce your income by any losses, including any loss on
Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Don’t include any social security benefits unless
(a) you are married filing separately and you lived with your spouse at any time in 2025, or (b) one-half of your social
security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000* if married
filing jointly). If (a) or (b) applies, see the Instructions for Form 1040 or Pub. 915 to figure the taxable part of social
security benefits you must include in gross income.
***
If you didn’t live with your spouse at the end of 2025 (or on the date your spouse died) and your gross income was at
least $5, you must file a return regardless of your age.
*
4
Chapter 1
2025 Filing Requirements
Publication 554 (2025)
income-producing factor), gross income from that business is the gross receipts. If you are self-employed in a
business involving manufacturing, merchandising, or mining, gross income from that business is the total sales minus the cost of goods sold. In either case, you must add
any income from investments and from incidental or outside operations or sources. See Pub. 334.
Dependents. If you could be claimed as a dependent by
another taxpayer (that is, you meet the dependency tests
in Pub. 501), special filing requirements apply. See Pub.
501.
Decedents
A personal representative of a decedent’s estate can be
an executor, an administrator, or anyone who is in charge
of the decedent’s property.
If you are acting as the personal representative of a
person who died during the year, you may have to file a final return for that decedent. You also have other duties,
such as notifying the IRS that you are acting as the personal representative. Form 56, Notice Concerning Fiduciary Relationship, is available for this purpose.
When you file a return for the decedent, either as the
personal representative or as the surviving spouse, you
should enter “DECEASED,” the decedent’s name, and the
date of death across the top of the tax return.
If no personal representative has been appointed by
the due date for filing the return, the surviving spouse (on
a joint return) should sign the return and enter in the signature area “Filing as surviving spouse.”
For more information, see Pub. 559.
Surviving spouse. If you are the surviving spouse, the
year your spouse died is the last year for which you can
file a joint return with that spouse. After that, if you don’t
remarry, you must file as a qualifying surviving spouse,
head of household, or single. For more information about
each of these filing statuses, see Pub. 501.
If you remarry before the end of the year in which your
spouse died, a final joint return with the deceased spouse
can’t be filed. You can, however, file a joint return with your
new spouse. In that case, the filing status of your deceased spouse for their final return is married filing separately.
The level of income that requires you to file an income tax return changes when your filing status
CAUTION changes (see Table 1-1). Even if you and your deceased spouse weren’t required to file a return for several
years, you may have to file a return for tax years after the
year of death. For example, if your filing status changes
from filing jointly in 2024 to single in 2025 because of the
death of your spouse, and your gross income is $25,000
for both years, you must file a return for 2025 even though
you didn’t have to file a return for 2024.
!
Publication 554 (2025)
Chapter 2
2.
Taxable and Nontaxable
Income
Generally, income is taxable unless it is specifically exempt (not taxed) by law. Your taxable income may include
compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income,
gain from sales or exchanges of property, and business income of all kinds.
Under special provisions of the law, certain items are partially or fully exempt from tax. Provisions that are of special
interest to older taxpayers are discussed in this chapter.
Compensation for Services
Generally, you must include in gross income everything
you receive in payment for personal services. In addition
to wages, salaries, commissions, tips, bonuses, and fees,
this includes other forms of compensation such as certain
fringe benefits and stock options.
You don’t need to receive the compensation in cash for
it to be taxable. Payments you receive in the form of goods
or services must generally be included in gross income at
their fair market value.
Volunteer work. Don’t include in your gross income
amounts you receive for supportive services or reimbursements for out-of-pocket expenses under any of the following volunteer programs.
• Retired Senior Volunteer Program (RSVP).
• Foster Grandparent Program.
• Senior Companion Program.
• Service Corps of Retired Executives (SCORE).
Unemployment compensation. You must include in income all unemployment compensation you or your
spouse (if married filing jointly) received.
More information. See Pub. 525 for more detailed information on specific types of income.
Retirement Plan Distributions
This section summarizes the tax treatment of amounts you
receive from traditional individual retirement arrangements
(IRAs), employee pensions or annuities, and disability
pensions or annuities. A traditional IRA is any IRA that
isn’t a Roth or SIMPLE IRA. A Roth IRA is an individual retirement plan that can be either an account or an annuity
and features nondeductible contributions and tax-free
Taxable and Nontaxable Income
5
distributions. A SIMPLE IRA is a tax-favored retirement
plan that certain small employers (including self-employed
individuals) can set up for the benefit of their employees.
More detailed information can be found in Pub. 590-A,
Pub. 590-B, and Pub. 575.
Individual Retirement Arrangements
(IRAs)
In general, distributions from a traditional IRA are taxable
in the year you receive them. Exceptions to the general
rule are rollovers, tax-free withdrawals of contributions,
and the return of nondeductible contributions. These are
discussed in Pub. 590-B.
If you made nondeductible contributions to a tradi-
TIP tional IRA, you must file Form 8606, Nondeducti-
ble IRAs. If you don’t file Form 8606 with your return, you may have to pay a $50 penalty. Also, when you
receive distributions from your traditional IRA, the
amounts will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were
made.
Early distributions. Generally, early distributions are
amounts distributed from your traditional IRA account or
annuity before you are age 591/2, or amounts you receive
when you cash in retirement bonds before you are age
591/2. You must include early distributions of taxable
amounts in your gross income. These taxable amounts
are also subject to an additional 10% tax unless the distribution qualifies for an exception. For purposes of the additional 10% tax, an IRA is a qualified retirement plan. For
more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later.
Pensions and Annuities
Generally, if you didn’t pay any part of the cost of your employee pension or annuity, and your employer didn’t withhold part of the cost of the contract from your pay while
you worked, the amounts you receive each year are fully
taxable. However, see Insurance Premiums for Retired
Public Safety Officers, later.
If you paid part of the cost of your pension or annuity
plan (see Cost, later), you can exclude part of each annuity payment from income as a recovery of your cost (investment in the contract). This tax-free part of the payment is figured when your annuity starts and remains the
same each year, even if the amount of the payment
changes. The rest of each payment is taxable. However,
see Insurance Premiums for Retired Public Safety Officers, later.
You figure the tax-free part of the payment using one of
the following methods.
• Simplified Method. You must generally use this
method if your annuity is paid under a qualified plan (a
qualified employee plan, a qualified employee annuity,
or a tax-sheltered annuity plan or contract). You can’t
use this method if your annuity is paid under a nonqualified plan.
• General Rule. You must use this method if your annuity is paid under a nonqualified plan. You generally
can’t use this method if your annuity is paid under a
qualified plan.
TIP
Contact your employer or plan administrator to
find out if your pension or annuity is paid under a
qualified or nonqualified plan.
After age 591/2. After you reach age 591/2, you can receive distributions from your traditional IRA without having
to pay the 10% additional tax.
You determine which method to use when you first begin receiving your annuity, and you continue using it each
year that you recover part of your cost.
Required Distributions
Exclusion limit. If your annuity starting date is after
1986, the total amount of annuity income you can exclude
over the years as a recovery of the cost can’t exceed your
net cost (figured without any reduction for a refund feature). Any unrecovered cost at your (or the last annuitant’s) death is allowed as an “other itemized deduction”
on the final return of the decedent.
If you contributed to your pension or annuity and your
annuity starting date is before 1987, you can continue to
take your monthly exclusion for as long as you receive
your annuity. If you chose a joint and survivor annuity, your
survivor can continue to take the survivor’s exclusion figured as of the annuity starting date. The total exclusion
may be more than your cost.
General required minimum distribution rule. If you
are the owner of a traditional IRA, you must generally receive the entire balance in your IRA or start receiving periodic distributions from your IRA by April 1 of the year following the year in which you reach age 73 (72 for those
individuals who reach age 72 before January 1, 2023).
See When Must You Withdraw Assets? (Required Minimum Distributions) in Pub. 590-B. If distributions from your
traditional IRA(s) are less than the required minimum distribution for the year, you may have to pay an excise tax for
that year on the amount not distributed as required. For
more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. See also
Excess Accumulations (Insufficient Distributions) in Pub.
590-B.
6
Chapter 2
Cost. Before you can figure how much, if any, of your
pension or annuity benefits are taxable, you must determine your cost in the plan (your investment in the contract). Your total cost in the plan includes everything that
you paid. It also includes amounts your employer contributed that were taxable to you when paid. However, see
Foreign employment contributions, later.
Taxable and Nontaxable Income
Publication 554 (2025)
From this total cost, subtract any refunded premiums,
rebates, dividends, unrepaid loans, or other tax-free
amounts you received by the later of the annuity starting
date or the date on which you received your first payment.
have chosen to use the Simplified Method if your annuity
is payable for your life (or the lives of you and your survivor
annuitant) and you met both of the conditions listed
above.
Annuity starting date. The annuity starting date is the
later of the first day of the first period for which you received a payment from the plan or the date on which the
plan’s obligations became fixed.
Guaranteed payments. Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of
your investment) is payable even if you and any survivor
annuitant don’t live to receive the minimum. If the minimum amount is less than the total amount of the payments
you are to receive, barring death, during the first 5 years
after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments.
The amount of your contributions to the plan may
TIP be shown in box 9b of any Form 1099-R, Distribu-
tions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that
you receive.
Foreign employment contributions. If you worked
abroad, certain amounts your employer paid into your retirement plan that weren’t includible in your gross income
may be considered part of your cost. For details, see Foreign employment contributions in Pub. 575.
Withholding. The payer of your pension, profit-sharing,
stock bonus, annuity, or deferred compensation plan will
withhold income tax on the taxable part of amounts paid to
you. However, you can choose not to have tax withheld on
the payments you receive, unless they are eligible rollover
distributions. (These are distributions that are eligible for
rollover treatment but aren’t paid directly to another qualified retirement plan or to a traditional IRA.) See Withholding Tax and Estimated Tax and Rollovers in Pub. 575 for
more information.
For payments other than eligible rollover distributions,
you can tell the payer how much to withhold by filing a
Form W-4P, Withholding Certificate for Periodic Pension or
Annuity Payments.
Simplified Method. Under the Simplified Method, you
figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly
payments. For an annuity that is payable over the lives of
the annuitants, this number is based on the annuitants’
ages on the annuity starting date and is determined from a
table. For any other annuity, this number is the number of
monthly annuity payments under the contract.
Who must use the Simplified Method. You must use
the Simplified Method if your annuity starting date is after
November 18, 1996, and you meet both of the following
conditions.
1. You receive your pension or annuity payments from a
qualified plan.
2. On your annuity starting date, at least one of the following conditions applies to you.
a. You are under age 75.
b. You are entitled to less than 5 years of guaranteed
payments.
If your annuity starting date is after July 1, 1986, and
before November 19, 1996, and you previously chose to
use the Simplified Method, you must continue to use it
each year that you recover part of your cost. You could
Publication 554 (2025)
Chapter 2
Who can’t use the Simplified Method. You can’t use
the Simplified Method and must use the General Rule if
you receive pension or annuity payments from:
• A nonqualified plan, such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan; or
• A qualified plan if you are age 75 or older on your annuity starting date and you are entitled to at least 5
years of guaranteed payments (defined above).
In addition, you had to use the General Rule for either
circumstance described above if your annuity starting date
is after July 1, 1986, and before November 19, 1996. You
also had to use it for any fixed-period annuity. If you didn’t
have to use the General Rule, you could have chosen to
use it. You also had to use the General Rule for payments
from a qualified plan if your annuity starting date is before
July 2, 1986, and you didn’t qualify to use the Three-Year
Rule.
If you had to use the General Rule (or chose to use it),
you must continue to use it each year that you recover
your cost.
Unless your annuity starting date was before 1987,
once you have recovered all of your nontaxable investment, all of each remaining payment you receive is fully
taxable. Once your remaining payments are fully taxable,
there is no longer a concern with the General Rule or Simplified Method.
Complete information on the General Rule, including
the actuarial tables you need, is contained in Pub. 939.
How to use the Simplified Method. Complete the
Simplified Method Worksheet in the Instructions for Form
1040 or the Instructions for Form 1040-NR, or in Pub. 575
to figure your taxable annuity for 2025. Be sure to keep the
completed worksheet; it will help you figure your taxable
annuity next year.
To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for
your annuity. How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. For
this purpose, treat an annuity that is payable over the life
of an annuitant as payable for that annuitant’s life even if
the annuity has a fixed-period feature or also provides a
temporary annuity payable to the annuitant’s child under
age 25.
Taxable and Nontaxable Income
7
You don’t need to complete line 3 of the work-
TIP sheet or make the computation on line 4 if you re-
ceived annuity payments last year and used last
year’s worksheet to figure your taxable annuity. Instead,
enter the amount from line 4 of last year’s worksheet on
line 4 of this year’s worksheet.
Single-life annuity. If your annuity is payable for your
life alone, use Table 1 at the bottom of the worksheet to
determine the total number of expected monthly payments. Enter on line 3 the number shown for your age on
your annuity starting date. This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996.
Multiple-lives annuity. If your annuity is payable for
the lives of more than one annuitant, use Table 2 at the
bottom of the worksheet to determine the total number of
expected monthly payments. Enter on line 3 the number
shown for the annuitants’ combined ages on the annuity
starting date. For an annuity payable to you as the primary
annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. For an annuity that has no primary annuitant and is
payable to you and others as survivor annuitants, combine
the ages of the oldest and youngest annuitants. Don’t treat
as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant’s death.
However, if your annuity starting date is before 1998,
don’t use Table 2 and don’t combine the annuitants’ ages.
Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant’s age on the annuity starting date. This
number will differ depending on whether your annuity
starting date is before November 19, 1996, or after November 18, 1996.
Fixed-period annuities. If your annuity doesn’t depend in whole or in part on anyone’s life expectancy, the
total number of expected monthly payments to enter on
line 3 of the worksheet is the number of monthly annuity
payments under the contract.
Line 6. The amount on line 6 should include all
amounts that could have been recovered in prior years. If
you didn’t recover an amount in a prior year, you may be
able to amend your returns for the affected years.
TIP
Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in
later years.
Example. Kris Smith, age 65, began receiving retirement benefits in 2025, under a joint and survivor annuity.
Kris’ annuity starting date is January 1, 2025. Kris is married to Pat, age 65. The benefits are to be paid over the
joint lives of Kris and Pat. Kris had contributed $31,000 to
a qualified plan and had received no distributions before
the annuity starting date. Kris is to receive a retirement
benefit of $1,200 a month, and Pat is to receive a monthly
survivor benefit of $600 upon Kris’ death.
8
Chapter 2
Kris must use the Simplified Method to figure the taxable annuity because the payments are from a qualified
plan and Kris is under age 75. You can find a blank version of this worksheet in Pub. 575.
Survivors of retirees. Benefits paid to you as a survivor
under a joint and survivor annuity must be included in your
gross income in the same way the retiree would have included them in gross income.
If you receive a survivor annuity because of the death
of a retiree who had reported the annuity under the
Three-Year Rule, include the total received in your income.
The retiree’s cost has already been recovered tax free.
If the retiree was reporting the annuity payments under
the General Rule, you must apply the same exclusion percentage the retiree used to your initial payment called for
in the contract. The resulting tax-free amount will then remain fixed. Any increases in the survivor annuity are fully
taxable.
If the retiree was reporting the annuity payments under
the Simplified Method, the part of each payment that is tax
free is the same as the tax-free amount figured by the retiree at the annuity starting date. See Simplified Method,
earlier.
How to report. If you file Form 1040, 1040-SR, or
1040-NR, report your total annuity on line 5a, and the taxable part on line 5b. If your pension or annuity is fully taxable, enter it on line 5b. Don’t make an entry on line 5a.
Example. You are a Form 1040 or 1040-SR filer and
you received monthly payments totaling $1,200 (12
months x $100) during 2025 from a pension plan that was
completely financed by your employer. You had paid no
tax on the payments that your employer made to the plan,
and the payments weren’t used to pay for accident, health,
or long-term care insurance premiums (as discussed later
under Insurance Premiums for Retired Public Safety Officers). The entire $1,200 is taxable. You include $1,200
only on Form 1040 or 1040-SR, line 5b.
Joint return. If you file a joint return and you and your
spouse each receive one or more pensions or annuities,
report the total of the pensions and annuities on line 5a of
Form 1040, 1040-SR, or 1040-NR. Report the total of the
taxable parts on line 5b of Form 1040, 1040-SR, or
1040-NR.
Form 1099-R. You should receive a Form 1099-R for
your pension or annuity. Form 1099-R shows your pension
or annuity for the year and any income tax withheld. You
should receive a Form W-2, Wage and Tax Statement, if
you receive distributions from certain nonqualified plans.
You must attach Forms 1099-R or Forms W-2 to
your 2025 tax return if federal income tax was
CAUTION withheld. Generally, you should be sent these
forms by February 2, 2026.
!
Nonperiodic Distributions
If you receive a nonperiodic distribution from your retirement plan, you may be able to exclude all or part of it from
Taxable and Nontaxable Income
Publication 554 (2025)
your income as a recovery of your cost. Nonperiodic distributions include cash withdrawals, distributions of current
earnings (dividends) on your investment, and certain
loans. For information on how to figure the taxable amount
of a nonperiodic distribution, see Taxation of Nonperiodic
Payments in Pub. 575.
General exceptions to tax. There are a number of exceptions to the early distribution tax. Some general exceptions include, but are not limited to, distributions:
The taxable part of a nonperiodic distribution may
be subject to an additional 10% tax. See Tax on
CAUTION Early Distributions, later.
• Made from a retirement plan in connection with feder-
!
Lump-sum distributions. For information on special tax
treatment for lump-sum distributions from a qualified employee plan or qualified employee annuity paid to individuals born before January 2, 1936, see the 2024 edition of
Pub. 554 on IRS.gov.
For individuals born on or after January 2, 1936, see
Lump-Sum Distributions in Pub. 575.
Form 1099-R. If you receive a total distribution from a
plan, you should receive a Form 1099-R. If the distribution
qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. The amount in box 2a,
“Taxable amount,” minus the amount in box 3, “Capital
gain,” is the ordinary income part.
More information. For more detailed information on
lump-sum distributions, see Pub. 575 or Form 4972, Tax
on Lump-Sum Distributions.
• Made from a retirement plan to an individual who has
been certified by a physician as having a terminal illness;
ally declared disasters;
• Made as part of a series of substantially equal peri-
odic payments (made at least annually) for your life (or
life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a
qualified retirement plan, the payments must begin after separation from service);
• Made because you are totally and permanently disabled;
• Made on or after the death of the plan participant or
contract holder;
• Made because you separated from service in or after
the year you reach age 55 (age 50 for qualified safety
employees and private sector firefighters or 25 years
of service under the plan, whichever is earlier);
• Made to domestic abuse victims who meet certain criteria; or
• Made from a retirement plan for certain emergency
personal expenses.
Tax on Early Distributions
Most distributions you receive from your qualified retirement plan and nonqualified annuity contracts before you
reach age 591/2 are subject to an additional tax of 10%.
The tax applies to the taxable part of the distribution.
For this purpose, a qualified retirement plan is:
• A qualified employee plan (including a qualified cash
or deferred arrangement (CODA) under Internal Revenue Code section 401(k)),
• A qualified employee annuity plan,
• A tax-sheltered annuity plan (section 403(b) plan),
• An eligible state or local government section 457 de-
ferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a
direct transfer or rollover from one of the other plans
listed here or an IRA), or
• An IRA.
You may have to pay a 25%, rather than a 10%,
additional tax if you receive distributions from a
CAUTION SIMPLE IRA before you reach age 591/2. See
Pub. 560.
!
Reporting tax. If you owe the tax on early distributions,
you must generally attach Form 5329, Additional Taxes on
Qualified Plans (Including IRAs) and Other Tax-Favored
Accounts, to your 2025 income tax return. If you don’t
have to file a 2025 income tax return, you may file Form
5329 by itself. See the Instructions for Form 5329. In addition, you don’t have to attach Form 5329 to your income
tax return if distribution code 1 (early distribution, no
known exception) is correctly shown in box 7 of all your
Forms 1099-R, and you owe the additional tax on each
Form 1099-R. Instead, multiply the taxable part of the
early distribution by 10% (0.10), or 25% (0.25) if applicable, and enter the result on Schedule 2 (Form 1040),
line 8. See the instructions for Schedule 2 (Form 1040),
line 8, for more information about reporting the early distribution tax.
Tax on Excess Accumulation
To make sure that most of your retirement benefits are
paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive
from qualified retirement plans must begin no later than
your required beginning date. Unless the rule for 5% owners applies, this is generally April 1 of the year that follows
the later of:
• The calendar year in which you reach age 73, or
• The calendar year in which you retire from employment with the employer maintaining the plan.
Publication 554 (2025)
Chapter 2
Taxable and Nontaxable Income
9
However, your plan may require you to begin to receive
payments by April 1 of the year that follows the year in
which you reach age 73, even if you haven’t retired.
For this purpose, a qualified retirement plan includes:
• A qualified employee plan,
• A qualified employee annuity plan,
• An eligible section 457 deferred compensation plan,
• A tax-sheltered annuity plan (section 403(b) plan) (for
benefits accruing after 1986), or
• An IRA.
An excess accumulation is the undistributed re-
TIP mainder of the required minimum distribution that
was left in your qualified retirement plan.
5% owners. If you are a 5% owner, see Pub. 575 for
more information on distribution dates.
Amount of tax. If you don’t receive the required minimum
distribution, you may be subject to an additional tax. See
Pub. 590-B and the Instructions for Form 5329 for more information.
Form 5329. You must file a Form 5329 if you owe a tax
because you didn’t receive a minimum required distribution from your qualified retirement plan.
Additional information. For more detailed information
on the tax on excess accumulation, see Pub. 575.
Insurance Premiums for Retired Public
Safety Officers
If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew who is retired because of
disability or because you reached normal retirement age),
you can elect to exclude from income distributions made
from your eligible retirement plan that are used to pay the
premiums for coverage by an accident or health plan or a
long-term care insurance contract. The premiums can be
for coverage for you, your spouse, or your dependent(s).
The distribution must be from the plan maintained by the
employer from which you retired as a public safety officer.
The distribution can be made directly from the plan to the
provider of the accident or health plan or long-term care
insurance contract, or the distribution can be made to you
to pay to the provider of the accident or health plan or
long-term care insurance contract. You can exclude from
income the smaller of the amount of the premiums paid or
$3,000. You can make this election only for amounts that
would otherwise be included in your income. The amount
excluded from your income can’t be used to claim a medical expense deduction.
An eligible retirement plan is a governmental plan that
is a:
• Qualified trust,
• Section 403(a) plan,
10
Chapter 2
• Section 403(b) annuity, or
• Section 457(b) plan.
You can exclude from income only the smaller of
the amount of the premiums paid or $3,000. This
CAUTION is true if the distribution was made directly from
the plan to the provider of the accident or health plan or
long-term care insurance contract or if the distribution was
made to you and you paid the provider of the accident or
health plan or long-term care insurance contract. If you received a distribution from your eligible retirement plan, and
you used part of that distribution to pay premiums for an
accident or health plan or long-term care insurance contract, you can still exclude from income only the smaller of
the amount of the premiums paid or $3,000. The rest of
the distribution is taxable to you and should be reported
as follows.
!
If you make this election, reduce the otherwise taxable
amount of your pension or annuity by the amount excluded. The amount shown in box 2a of Form 1099-R doesn't
reflect the exclusion. Report your total distributions on
Form 1040, 1040-SR, or 1040-NR, line 5a. Report the taxable amount on Form 1040, 1040-SR, or 1040-NR,
line 5b. Also, check box 2 on line 5c.
If you are retired on disability and reporting your disability pension on Form 1040, 1040-SR, or 1040-NR, line 1h,
include only the taxable amount on that line and enter
“PSO” and the amount excluded on the line next to line 1h.
Railroad Retirement Benefits
Benefits paid under the Railroad Retirement Act fall into
two categories. These categories are treated differently for
income tax purposes.
Social security equivalent benefits. The first category
is the amount of tier 1 railroad retirement benefits that
equals the social security benefit that a railroad employee
or beneficiary would have been entitled to receive under
the social security system. This part of the tier 1 benefit is
the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. (See Social Security and Equivalent Railroad Retirement Benefits,
later.)
Non-social security equivalent benefits. The second
category contains the rest of the tier 1 benefits, called the
non-social security equivalent benefit (NSSEB). It also
contains any tier 2 benefit, vested dual benefit (VDB), and
supplemental annuity benefit. This category of benefits is
treated as an amount received from a qualified employee
plan. This allows for the tax-free (nontaxable) recovery of
employee contributions from the tier 2 benefits and the
NSSEB part of the tier 1 benefits. VDBs and supplemental
annuity benefits are non-contributory pensions and are
fully taxable.
More information. For more information about railroad
retirement benefits, see Pub. 575.
Taxable and Nontaxable Income
Publication 554 (2025)
Military Retirement Pay
Are Any of Your Benefits Taxable?
Military retirement pay based on age or length of service
is taxable and must be included in income as a pension
on Form 1040, 1040-SR, or 1040-NR, lines 5a and 5b.
However, certain military and government disability pensions that are based on a percentage of disability from active service in the armed forces of any country generally
aren’t taxable. For more information, including information
about veterans’ benefits and insurance, see Pub. 525.
Note: When the term “benefits” is used in this section,
it applies to both social security benefits and the SSEB
portion of tier 1 railroad retirement benefits.
Social Security and Equivalent
Railroad Retirement Benefits
This discussion explains the federal income tax rules for
social security benefits and equivalent tier 1 railroad retirement benefits.
Social security benefits include monthly retirement, survivor, and disability benefits. They don’t include supplemental security income (SSI) payments, which aren’t taxable.
Equivalent tier 1 railroad retirement benefits are the part
of tier 1 benefits that a railroad employee or beneficiary
would have been entitled to receive under the social security system. They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits.
If you received these benefits during 2025, you should
have received a Form SSA-1099 or Form RRB-1099
(Form SSA-1042S or Form RRB-1042S if you are a nonresident alien) showing the amount of the benefits.
Social Security Information
Obtaining social security information. Social security
beneficiaries may quickly and easily obtain various information from the SSA’s website with a my Social Security
account to:
• Keep track of your earnings and verify them every
year,
• Get an estimate of your future benefits if you are still
working,
• Get a letter with proof of your benefits if you currently
receive them,
• Change your address,
• Start or change your direct deposit,
• Get a replacement Medicare card, and
• Get a replacement Form SSA-1099 or SSA-1042S for
the tax season.
For more information and to set up an account, go to
SSA.gov/myaccount.
Publication 554 (2025)
Chapter 2
To find out whether any of your benefits may be taxable,
compare the base amount for your filing status (explained
later) with the total of:
• One-half of your benefits; plus
• All your other income, including tax-exempt interest.
When making this comparison, don’t reduce your other
income by any exclusions for:
• Interest from qualified U.S. savings bonds,
• Employer-provided adoption benefits,
• Foreign earned income or foreign housing, or
• Income earned in American Samoa or Puerto Rico by
bona fide residents.
Figuring total income. To figure the total of one-half of
your benefits plus your other income, use Worksheet 2-A.
If that total amount is more than your base amount, part of
your benefits may be taxable.
If you are married and file a joint return for 2025, you
and your spouse must combine your incomes and your
benefits to figure whether any of your combined benefits
are taxable. Even if your spouse didn’t receive any benefits, you must add your spouse’s income to yours to figure
whether any of your benefits are taxable.
If the only income you received during 2025 was
TIP your social security or the SSEB portion of tier 1
railroad retirement benefits, your benefits generally aren’t taxable and you probably don’t have to file a return. If you have income in addition to your benefits, you
may have to file a return even if none of your benefits are
taxable.
Base Amount
Your base amount is:
• $25,000 if you are single, head of household, or qualifying surviving spouse;
• $25,000 if you are married filing separately and lived
apart from your spouse for all of 2025;
• $32,000 if you are married filing jointly; or
• $0 if you are married filing separately and lived with
your spouse at any time during 2025.
Repayment of Benefits
Any repayment of benefits you made during 2025 must be
subtracted from the gross benefits you received in 2025. It
doesn’t matter whether the repayment was for a benefit
you received in 2025 or in an earlier year. If you repaid
more than the gross benefits you received in 2025, see
Repayments More Than Gross Benefits, later.
Taxable and Nontaxable Income
11
Worksheet 2-A. A Quick Way To Check if Your Benefits May
Be Taxable
A.
Keep for Your Records
Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Include
the full amount of any lump-sum benefit payments received in 2025, for 2025 and
earlier years. (If you received more than one form, combine the amounts from box 5
and enter the total.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A.
Note: If the amount on line A is zero or less, stop here; none of your benefits are
taxable this year.
B.
Enter one-half of the amount on line A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B.
C.
Enter your taxable pensions, wages, interest, dividends, and other taxable income . . . . . . . .
C.
D.
Enter any tax-exempt interest income (such as interest on municipal bonds) plus any
exclusions from income for:
• Interest from qualified U.S. savings bonds,
• Employer-provided adoption benefits,
• Foreign earned income or foreign housing, or
• Income earned in American Samoa or Puerto Rico by bona fide residents . . . . . . . . . . . . . .
D.
E.
Add lines B, C, and D and enter the total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E.
F.
If you are:
• Married filing jointly, enter $32,000;
• Single, head of household, qualifying surviving spouse, or married filing separately and
you lived apart from your spouse for all of 2025, enter $25,000; or
• Married filing separately and you lived with your spouse at any time during 2025,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F.
G.
Is the amount on line F less than or equal to the amount on line E?
No. None of your benefits are taxable this year.
Yes. Some of your benefits may be taxable. To figure how much of your benefits
are taxable, see Which worksheet to use under How Much Is Taxable.
Your gross benefits are shown in box 3 of Form
SSA-1099 or Form RRB-1099. Your repayments are
shown in box 4. The amount in box 5 shows your net benefits for 2025 (box 3 minus box 4). Use the amount in
box 5 to figure whether any of your benefits are taxable.
your benefits can be taxable if either of the following situations applies to you.
Tax Withholding and Estimated Tax
• You are married filing separately and lived with your
You can choose to have federal income tax withheld from
your social security and/or the SSEB portion of your tier 1
railroad retirement benefits. If you choose to do this, you
must complete a Form W-4V, Voluntary Withholding Request.
If you are a nonresident alien, 85% of your benefits are
taxable. However, this income is exempt under some tax
treaties.
How Much Is Taxable?
If part of your benefits are taxable, how much is taxable
depends on the total amount of your benefits and other income. Generally, the higher that total amount, the greater
the taxable part of your benefits.
Maximum taxable part. The taxable part of your benefits
usually can’t be more than 50%. However, up to 85% of
Chapter 2
income is more than $34,000 ($44,000 if you are married filing jointly).
spouse at any time during 2025.
If you don’t choose to have income tax withheld, you
may have to request additional withholding from other income, or pay estimated tax during the year. For details,
see Pub. 505, or the instructions for Form 1040-ES, Estimated Tax for Individuals.
12
• The total of one-half of your benefits and all your other
Which worksheet to use. A worksheet to figure your
taxable benefits is in the Instructions for Form 1040. However, you will need to use a different worksheet(s) if any of
the following situations applies to you.
1. You contributed to a traditional IRA and you or your
spouse was covered by a retirement plan at work. In
this situation, you must use the special worksheets in
Pub. 590-A to figure both your IRA deduction and your
taxable benefits.
2. Situation (1) doesn’t apply and you take one or more
of the following exclusions.
• Interest from qualified U.S. savings bonds (Form
8815, Exclusion of Interest From Series EE and I
U.S. Savings Bonds Issued After 1989).
• Employer-provided adoption benefits (Form 8839,
Qualified Adoption Expenses).
Taxable and Nontaxable Income
Publication 554 (2025)
• Foreign earned income or housing (Form 2555,
Foreign Earned Income).
• Income earned in American Samoa (Form 4563,
Exclusion of Income for Bona Fide Residents of
American Samoa) or Puerto Rico by bona fide
residents.
In these situations, you must use Worksheet 1 in
Pub. 915 to figure your taxable benefits.
3. You received a lump-sum payment for an earlier year.
In this situation, also complete Worksheet 2 or 3 and
Worksheet 4 in Pub. 915. See Lump-Sum Election,
later.
How To Report Your Benefits
If part of your benefits are taxable, you must use Form
1040, 1040-SR, or 1040-NR.
Reporting on Form 1040 or 1040-SR. Report your net
benefits (the amount in box 5 of your Form SSA-1099 or
Form RRB-1099) on line 6a and the taxable part on
line 6b. If you are married filing separately and you lived
apart from your spouse for all of 2025, also check the box
on line 6d.
Reporting on Form 1040-NR. Report 85% of the total
amount of your benefits (box 5 of your Form SSA-1042S
or Form RRB-1042S) in the appropriate column of Schedule NEC (Form 1040-NR), line 8.
Benefits not taxable. Report your net benefits (the
amount in box 5 of your Form SSA-1099 or Form
RRB-1099) on Form 1040 or 1040-SR, line 6a. Enter -0on Form 1040 or 1040-SR, line 6b. If you are married filing
separately and you lived apart from your spouse for all of
2025, also check the box on line 6d.
Lump-Sum Election
You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2025 in your 2025 income, even if the payment includes benefits for an earlier
year.
This type of lump-sum benefit payment shouldn’t
TIP be confused with the lump-sum death benefit that
both the SSA and Railroad Retirement Board
(RRB) pay to many of their beneficiaries. No part of the
lump-sum death benefit is subject to tax. For more information about the lump-sum death benefit, go to the SSA
website at SSA.gov, and search using the keyword “death
benefit.”
Generally, you use your 2025 income to figure the taxable part of the total benefits received in 2025. However,
you may be able to figure the taxable part of a lump-sum
payment for an earlier year separately, using your income
for the earlier year. You can elect this method if it lowers
your taxable benefits. See Pub. 915 for more information.
Publication 554 (2025)
Chapter 2
Repayments More Than Gross
Benefits
In some situations, your Form SSA-1099 or Form
RRB-1099 will show that the total benefits you repaid
(box 4) are more than the gross benefits (box 3) you received. If this occurred, your net benefits in box 5 will be a
negative figure (a figure in parentheses) and none of your
benefits will be taxable. If you receive more than one form,
a negative figure in box 5 of one form is used to offset a
positive figure in box 5 of another form for that same year.
If you have any questions about this negative figure,
contact your local SSA office or your local U.S. RRB field
office.
Joint return. If you and your spouse file a joint return,
and your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse’s doesn’t, subtract the box 5
amount on your form from the box 5 amount on your spouse’s form. You do this to get your net benefits when figuring if your combined benefits are taxable.
Repayment of benefits received in an earlier year. If
the total amount shown in box 5 of all of your Forms
SSA-1099 and RRB-1099 is a negative figure, you may be
able to take an itemized deduction for the part of this negative figure that represents benefits you included in gross
income in an earlier year.
The deduction must be more than $3,000 and you have
to follow some special instructions. See Pub. 915 for those
instructions.
Sickness and Injury Benefits
Generally, you must report as income any amount you receive for personal injury or sickness through an accident
or health plan that is paid for by your employer. If both you
and your employer pay for the plan, only the amount you
receive that is due to your employer’s payments is reported as income. However, certain payments may not be
taxable to you. Some of these payments are discussed
later in this section. Also, see Military and Government
Disability Pensions and Other Sickness and Injury Benefits in Pub. 525.
Cost paid by you. If you pay the entire cost of an accident or health plan, don’t include any amounts you receive
from the plan for personal injury or sickness as income on
your tax return. If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to
include some, or all, of the reimbursement in your income.
Disability Pensions
If you retired on disability, you must include in income any
disability pension you receive under a plan that is paid for
by your employer. You must report your taxable disability
payments as wages on Form 1040, 1040-SR, or 1040-NR,
line 1h, until you reach minimum retirement age. Minimum
Taxable and Nontaxable Income
13
retirement age is generally the age at which you can first
receive a pension or annuity if you aren’t disabled.
If you were age 65 or older by the end of 2025 or
TIP you were retired on permanent and total disability
and received taxable disability income, you may
be able to claim the credit for the elderly or the disabled.
See Credit for the Elderly or the Disabled, later. For more
information on this credit, see the Instructions for Schedule R (Form 1040).
Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension
or annuity. Report the payments on Form 1040, 1040-SR,
or 1040-NR, lines 5a and 5b. For more information on
pensions and annuities, see Pub. 575.
Note: Don’t include in your income disability payments
you receive for injuries incurred as a direct result of terrorist attacks or military action directed against the United
States (or its allies), whether outside or within the United
States. For more information, see Terrorist attacks in Pub.
525.
Retirement and profit-sharing plans. If you receive
payments from a retirement or profit-sharing plan that
doesn’t provide for disability retirement, don’t treat the
payments as a disability pension. The payments must be
reported as a pension or annuity.
Accrued leave payment. If you retire on disability, any
lump-sum payment you receive for accrued annual leave
is a salary payment. The payment isn’t a disability payment. Include it in your income in the tax year you receive
it.
Long-Term Care Insurance Contracts
In most cases, long-term care insurance contracts are
treated as accident and health insurance contracts.
Amounts you receive from them (other than policyholder
dividends or premium refunds) are generally excludable
from income as amounts received for personal injury or
sickness. However, the amount you can exclude may be
limited. Long-term care insurance contracts are discussed
in more detail in Pub. 525.
Workers’ Compensation
Amounts you receive as workers’ compensation for an occupational sickness or injury are fully exempt from tax if
they are paid under a workers’ compensation act or a statute in the nature of a workers’ compensation act. The exemption also applies to your survivors. The exemption,
however, doesn’t apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury.
14
Chapter 2
If part of your workers’ compensation reduces
your social security or equivalent railroad retireCAUTION ment benefits, that part is considered social security (or equivalent railroad retirement) benefits and may
be taxable. For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier.
!
Return to work. If you return to work after qualifying for
workers’ compensation, salary payments you receive for
performing light duties are taxable as wages.
Other Sickness and Injury Benefits
In addition to disability pensions and annuities, you may
receive other payments for sickness or injury.
Federal Employees’ Compensation Act (FECA). Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of
death, aren’t taxable. However, you are taxed on amounts
you receive under this Act as continuation of pay for up to
45 days while a claim is being decided. Report this income on Form 1040, 1040-SR, or 1040-NR, line 1a. Also,
pay for sick leave while a claim is being processed is taxable and must be included in your income as wages.
If part of the payments you receive under FECA
reduces your social security or equivalent railroad
CAUTION retirement benefits, that part is considered social
security (or equivalent railroad retirement) benefits and
may be taxable. For a discussion of the taxability of these
benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier.
!
Other compensation. Many other amounts you receive
as compensation for sickness or injury aren’t taxable.
These include the following amounts.
• Benefits you receive under an accident or health insurance policy on which either you paid the premiums or
your employer paid the premiums but you had to include the amount of employer-paid premiums in your
income.
• Compensatory damages you receive for physical in-
jury or physical sickness, whether paid in a lump sum
or in periodic payments.
• Disability benefits you receive for loss of income or
earning capacity as a result of injuries under a no-fault
car insurance policy.
• Compensation you receive for permanent loss or loss
of use of a part or function of your body, for your permanent disfigurement, or for such loss or disfigurement suffered by your spouse or dependent(s). This
compensation must be based only on the injury and
not on the period of your absence from work. These
benefits aren’t taxable even if your employer pays for
the accident and health plan that provides these benefits.
Taxable and Nontaxable Income
Publication 554 (2025)
Life Insurance Proceeds
Life insurance proceeds paid to you because of the death
of the insured person generally aren’t taxable unless the
policy was turned over to you for a price or was acquired
in a reportable policy sale. This is true even if the proceeds were paid under an accident or health insurance
policy or an endowment contract issued on or before December 31, 1984. However, interest income received as a
result of life insurance proceeds may be taxable.
Proceeds not received in installments. If death benefits are paid to you in a lump sum or other than at regular
intervals, include in your income only the benefits that are
more than the amount payable to you at the time of the insured person’s death. If the benefit payable at death isn’t
specified, include in your income the benefit payments
that are more than the present value of the payments at
the time of death.
Proceeds received in installments. If you receive life
insurance proceeds in installments, you can exclude part
of each installment from your income.
To determine the excluded part, divide the amount held
by the insurance company (generally, the total lump-sum
payable at the death of the insured person) by the number
of installments to be paid. Include anything over this excluded part in your income as interest.
Installments for life. If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds
in installments for the rest of your life without a refund or
period-certain guarantee, figure the excluded part of each
installment by dividing the amount held by the insurance
company by your life expectancy. If there is a refund or period-certain guarantee, the amount held by the insurance
company for this purpose is reduced by the actuarial value
of the guarantee.
Surviving spouse. If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude, in any year, up to $1,000 of the
interest included in the installments. If you remarry, you
can continue to take the exclusion.
Surrender of policy for cash. If you surrender a life insurance policy for cash, you must include in income any
proceeds that are more than the cost of the life insurance
policy. In general, your cost (or investment in the contract)
is the total of premiums that you paid for the life insurance
policy, less any refunded premiums, rebates, dividends, or
unrepaid loans that weren’t included in your income. You
should receive a Form 1099-R showing the total proceeds
and the taxable part. Report these amounts on Form
1040, 1040-SR, or 1040-NR, lines 5a and 5b.
Endowment Contract Proceeds
An endowment contract is a policy that pays you a specified amount of money on a certain date unless you die
Publication 554 (2025)
Chapter 2
before that date, in which case the money is paid to your
designated beneficiary. Endowment proceeds paid in a
lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. To determine
your cost, subtract from the total premiums (or other consideration) paid for the contract any amount that you previously received under the contract and excluded from your
income. Include in your income the part of the lump-sum
payment that is more than your cost.
Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity
of the policy are taxed as an annuity. The tax treatment of
an annuity is explained in Pub. 575. For this treatment to
apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. This
election must be made within 60 days after the lump-sum
payment first becomes payable to you.
Accelerated Death Benefits
Certain amounts paid as accelerated death benefits under
a life insurance contract or viatical settlement before the
insured’s death are generally excluded from income if the
insured is terminally or chronically ill. However, see Exception, later. For a chronically ill individual, accelerated
death benefits paid on the basis of costs incurred for
qualified long-term care services are fully excludable. Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to
a limit.
In addition, if any portion of a death benefit under a life
insurance contract on the life of a terminally or chronically
ill individual is sold or assigned to a viatical settlement
provider, the amount received is also excluded from income. Generally, a viatical settlement provider is one who
regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured
individuals who are terminally or chronically ill.
To report taxable accelerated death benefits made on a
per diem or other periodic basis, you must file Form 8853,
Archer MSAs and Long-Term Care Insurance Contracts,
with your return.
Terminally or chronically ill defined. A terminally ill
person is one who has been certified by a physician as
having an illness or physical condition that can reasonably
be expected to result in death within 24 months from the
date of the certification. A chronically ill person is one who
isn’t terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as
meeting either of the following conditions.
• The person is unable to perform (without substantial
help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence)
for a period of 90 days or more because of a loss of
functional capacity.
• The person requires substantial supervision to protect
themselves from threats to health and safety due to
severe cognitive impairment.
Taxable and Nontaxable Income
15
Exception. The exclusion doesn’t apply to any amount
paid to a person other than the insured if that other person
has an insurable interest in the life of the insured because
the insured:
• Is a director, officer, or employee of the other person;
or
• Has a financial interest in the business of the other
person.
To claim the exclusion, you must meet the ownership and
use tests. These tests generally require that during the
5-year period ending on the date of the sale, you must
have:
• Owned the home for at least 2 years (the ownership
test), and
• Lived in the home as your main home for at least 2
years (the use test). The 2 years of residence can fall
anywhere within the 5-year period, and it doesn’t need
to be a single block of time.
Sale of Home
You may be able to exclude from income any gain up to
$250,000 ($500,000 on a joint return in most cases) on
the sale of your main home. Generally, if you can exclude
all of the gain, you don’t need to report the sale on your
tax return. You can choose not to take the exclusion by including the gain from the sale in your gross income on
your tax return for the year of the sale.
Main home. Usually, your main home is the home you
live in most of the time and can be a:
• House,
• Houseboat,
• Mobile home,
• Cooperative apartment, or
• Condominium.
Maximum Amount of Exclusion
You can generally exclude up to $250,000 of the gain
(other than gain allocated to periods of nonqualified use)
on the sale of your main home if all of the following are
true.
• You meet the ownership test.
• You meet the use test.
• During the 2-year period ending on the date of the
sale, you didn’t exclude gain from the sale of another
home.
Joint returns. You may be able to exclude up to
$500,000 of the gain (other than gain allocated to periods
of nonqualified use) on the sale of your main home if you
are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint
returns, later, under Married Persons.
Reduced exclusion. Even if you don’t meet the requirements described above, you can still claim an exclusion in
some cases. Generally, you must have sold the home due
to a change in place of employment, health, or unforeseen
circumstances. The maximum amount you can exclude
will be reduced. See Pub. 523 for more information.
Expatriation tax. You can’t exclude gain from the sale of
your home if you are subject to the expatriation tax. See
Pub. 519 for more information about the expatriation tax.
16
Ownership and Use Tests
Chapter 2
Exception to use test for individuals with a disability.
There is an exception to the use test if, during the 5-year
period before the sale of your home:
• You become physically or mentally unable to care for
yourself, and
• You owned and lived in your home as your main home
for a total of at least 1 year.
If you qualify for this exception, you are considered to live
in your home during any time that you own the home and
live in a facility (including a nursing home) that is licensed
by a state or political subdivision to care for persons in
your condition.
If you meet this exception to the use test, you still have
to meet the 2-out-of-5-year ownership test to claim the exclusion.
Exception to ownership test for property acquired in
a like-kind exchange. If you acquired your main home in
a like-kind exchange, you must own the home for 5 years
before you qualify for the exclusion. This special 5-year
ownership rule continues to apply to the home even if you
give it to another person. A like-kind exchange is an exchange of property held for productive use in a trade or
business or for investment in which no gain or loss is recognized. See Pub. 523 for more information.
Period of nonqualified use. Generally, the gain from the
sale or exchange of your main home won’t qualify for the
exclusion to the extent that the gain is allocated to periods
of nonqualified use. Nonqualified use is any period after
December 31, 2008, during which the property isn’t used
as the main home. See Pub. 523 for more information.
Married Persons
Generally, if the home you sold counts as your main home
and you are a married person filing separately, the first
$250,000 of gain isn’t taxable if all of the following are true.
• You meet the ownership test.
• You meet the use test.
• During the 2-year period ending on the date of the
sale, you didn’t exclude gain from the sale of another
home.
You may be able to exclude up to $500,000 of the gain
(other than gain allocated to periods of nonqualified use)
Taxable and Nontaxable Income
Publication 554 (2025)
on the sale of your main home if you are married and file a
joint return and meet the requirements for joint returns,
discussed under Special rules for joint returns next.
Special rules for joint returns. You can exclude up to
$500,000 of the gain on the sale of your main home if all of
the following are true.
• You are married and file a joint return for the year.
• Either you or your spouse meets the ownership test.
• Both you and your spouse meet the use test.
• During the 2-year period ending on the date of the
sale, neither you nor your spouse exclude gain from
the sale of another home.
Sale of home by surviving spouse. If your spouse died
and you didn’t remarry before the date of sale, you are
considered to have owned and lived in the property as
your main home during any period of time when your
spouse owned and lived in it as a main home.
If you meet all of the following requirements, you may
qualify to exclude up to $500,000 of any gain from the sale
or exchange of your main home in 2025.
• The sale or exchange took place no more than 2 years
after the date of death of your spouse.
• You haven’t remarried.
• You and your spouse met the use test at the time of
your spouse’s death.
• You or your spouse met the ownership test at the time
of your spouse’s death.
• Neither you nor your spouse excluded gain from the
sale of another home during the last 2 years.
Home transferred from spouse. If your home was
transferred to you by your spouse (or former spouse if the
transfer was incident to divorce), you are considered to
have owned it during any period of time when your spouse
owned it.
Use of home after divorce. You are considered to have
used property as your main home during any period when:
• You owned it, and
• Your spouse or former spouse is allowed to live in it
under a divorce or separation instrument and uses it
as their main home.
Business Use or Rental of Home
You may be able to exclude gain from the sale of a home
that you have used for business or to produce rental income. However, you must meet the ownership and use
tests. See Pub. 523 for more information.
Recapturing depreciation. If you used all or part of your
home for business or rental after May 6, 1997, you may
need to pay back (recapture) some or all of the depreciation you were entitled to take on your property when you
sell it. See Pub. 523 for more information.
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Chapter 2
Reporting the Sale
Don’t report the 2025 sale of your main home on your tax
return unless:
• You received Form 1099-S, Proceeds From Real Estate Transactions;
• You have a gain and you don’t qualify to exclude all of
it;
• You have a gain and you choose not to exclude it; or
• You have a loss from the sale that is deductible.
A loss from the sale of your home, or the personal
part of your home if it was also used for business
CAUTION or to produce rental income, isn’t deductible.
!
If any of the above apply, report the sale in Part I or Part
II of Form 8949, Sales and Other Dispositions of Capital
Assets, as a short-term or long-term transaction, depending on how long you owned the home. If you used your
home for business or to produce rental income, you may
have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. See Pub. 523
for more information.
Reverse Mortgages
A reverse mortgage is a loan where the lender pays you
(in a lump sum, a monthly advance, a line of credit, or a
combination of all three) while you continue to live in your
home. With a reverse mortgage, you retain title to your
home. Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home,
reach the end of a pre-selected loan period, or die. Because reverse mortgages are considered loan advances
and not income, the amount you receive isn’t taxable. Any
interest (including original interest discount) accrued on a
reverse mortgage isn’t deductible home mortgage interest. See Pub. 936 for more information.
Other Items
The following items are generally excluded from taxable
income. You shouldn’t report them on your return, unless
otherwise indicated as taxable or includible in income.
Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheritance isn’t included in
your income. However, if property you receive this way
later produces income such as interest, dividends, or
rents, that income is taxable to you. If property is given to
a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift,
bequest, or inheritance is the income from property, that
income is taxable to you.
Taxable and Nontaxable Income
17
Veterans’ benefits. Don’t include in your income any veterans’ benefits paid under any law, regulation, or administrative practice administered by the Department of
Veterans Affairs (VA). See Pub. 525.
Public assistance benefits. Other items that are generally excluded from taxable income also include the following public assistance benefits.
Social security benefits. The SSA provides benefits
such as old-age benefits, benefits to disabled workers,
and benefits to spouses and dependents. These benefits
may be subject to federal income tax depending on your
filing status and other income. See Social Security and
Equivalent Railroad Retirement Benefits, earlier, and Pub.
915 for more information.
Welfare benefits. Don’t include in your income benefit
payments from a public welfare fund based upon need,
such as payments due to blindness. However, you must
include in your income any welfare payments that are
compensation for services or that are obtained fraudulently.
3.
Payments from a state fund for victims of crime.
Don’t include in your income payments from a state fund
for victims of crime if the payments are in the nature of
welfare payments. Don’t deduct medical expenses that
are reimbursed by such a fund.
Mortgage assistance payments. Payments made
under section 235 of the National Housing Act for mortgage assistance aren’t included in the homeowner’s income. Interest paid for the homeowner under the mortgage assistance program can’t be deducted.
Payments to reduce cost of winter energy use.
Payments made by a state to qualified people on the basis
of need to reduce their cost of winter energy use aren’t
taxable.
Nutrition Program for the Elderly. Food benefits you
receive under the Nutrition Program for the Elderly aren’t
taxable. If you prepare and serve free meals for the program, include in your income as wages the cash pay you
receive, even if you are also eligible for food benefits.
Reemployment Trade Adjustment Assistance
(RTAA). Payments you receive from a state agency under
RTAA must be included in your income. The state must
send you Form 1099-G, Certain Government Payments, to
advise you of the amount you should include in income.
The amount should be reported on Schedule 1 (Form
1040), line 8z.
Persons with disabilities. If you have a disability, include in income compensation you receive for services
you perform unless the compensation is otherwise excluded. However, don’t include in income the value of goods,
services, and cash that you receive, not in return for your
services, but for your training and rehabilitation because
you have a disability. Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind,
and services to help individuals with an intellectual disability do their work.
Medicare. Medicare benefits received under title XVIII of
the Social Security Act aren’t includible in the gross income of the individuals for whom they are paid. This includes basic (Part A (Hospital Insurance Benefits for the
Aged)) and supplementary (Part B (Supplementary Medical Insurance Benefits for the Aged)).
18
Chapter 3
Adjustments to Income
You may be able to subtract amounts from your total income (Form 1040 or 1040-SR, line 9) or total effectively
connected income (Form 1040-NR, line 9) to get your adjusted gross income (Form 1040, 1040-SR, or 1040-NR,
line 11a). Some adjustments to income follow.
• Contributions to your IRA (Schedule 1 (Form 1040),
line 20), explained later.
• Some health insurance costs (Schedule 1 (Form
1040), line 17) if you were self-employed and had a
net profit for the year, or if you received wages in 2025
from an S corporation in which you were a
more-than-2% shareholder.
• Payments to your self-employed SEP, SIMPLE, or
qualified plan (Schedule 1 (Form 1040), line 16). For
more information, including limits on how much you
can deduct, see Pub. 560.
• Penalties paid on early withdrawal of savings (Schedule 1 (Form 1040), line 18). Form 1099-INT, Interest
Income, or Form 1099-OID, Original Issue Discount,
will show the amount of any penalty you were
charged.
• Alimony payments (Schedule 1 (Form 1040),
line 19a). Certain conditions may apply for your alimony payment to be deductible from income. For
more information, see Pub. 504.
There are other items you can claim as adjustments to income. These adjustments are discussed in your tax return
instructions.
Individual Retirement
Arrangement (IRA)
Contributions and Deductions
This section explains the tax treatment of amounts you
pay into traditional IRAs. A traditional IRA is any IRA that
isn’t a Roth or SIMPLE IRA. Roth and SIMPLE IRAs are
defined earlier in the IRA discussion under Retirement
Adjustments to Income
Publication 554 (2025)
Plan Distributions. For more detailed information, see Pub.
590-A and Pub. 590-B.
Contributions. An IRA is a personal savings plan that offers you tax advantages to set aside money for your retirement. Two advantages of a traditional IRA are:
• You may be able to deduct some or all of your contributions to it, depending on your circumstances; and
• Generally, amounts in your IRA, including earnings
and gains, aren’t taxed until distributed.
Although interest earned from your traditional IRA
generally isn’t taxed in the year earned, it isn’t
CAUTION tax-exempt interest. Don’t report this interest on
your tax return as tax-exempt interest.
!
4.
Deductions
Most taxpayers have a choice of taking a standard deduction or itemizing their deductions. You benefit from the
standard deduction if your standard deduction is more
than the total of your allowable itemized deductions. If you
have a choice, you should use the method that gives you
the lower tax.
General limit. The most that can be contributed for 2025
to your traditional IRA is the smaller of the following
amounts.
Taxpayers age 65 or older may also be eligible for the enhanced deduction for seniors. Eligible taxpayers can claim
the enhanced deduction for seniors whether they claim
the standard deduction or itemize deductions. See Enhanced Deduction for Seniors, later.
• Your taxable compensation for the year.
• $7,000 ($8,000 if you were age 50 or older by the end
Standard Deduction
Contributions to Kay Bailey Hutchison Spousal
IRAs. In the case of a married couple filing a joint return
for 2025, up to $7,000 ($8,000 for each spouse age 50 or
older by the end of 2025) can be contributed to IRAs on
behalf of each spouse, even if one spouse has little or no
compensation.
The standard deduction amount depends on your filing
status, whether you are age 65 or older or blind, and
whether another taxpayer can claim you as a dependent.
Generally, the standard deduction amounts are adjusted
each year for inflation. In most cases, you can use Worksheet 4-1 to figure your standard deduction amount.
For more information on the general limit and the Kay
Bailey Hutchison Spousal IRA limit, see How Much Can
Be Contributed? in Pub. 590-A.
Persons not eligible for the standard deduction. Your
standard deduction is zero and you should itemize any deductions you have if:
of 2025).
Deductible contribution. Generally, you can deduct
the lesser of the contributions to your traditional IRA for
the year or the general limit (or Kay Bailey Hutchison
Spousal IRA limit, if applicable) just explained. However, if
you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the
contributions. Your deduction may be reduced or eliminated, depending on your filing status and the amount of
your income. For more information, see Limit if Covered by
Employer Plan in Pub. 590-A.
Nondeductible contribution. The difference between
your total permitted contributions and your IRA deduction,
if any, is your nondeductible contribution. You must file
Form 8606 to report nondeductible contributions even if
you don’t have to file a tax return for the year.
• You are married and filing a separate return, and your
spouse itemizes deductions;
• You are filing a tax return for a short tax year because
of a change in your annual accounting period; or
• You are a nonresident or dual-status alien during the
year. You are considered a dual-status alien if you
were both a nonresident alien and a resident alien during the year.
If you are a nonresident alien who is married to a U.S.
citizen or resident alien at the end of the year, you can
choose to be treated as a U.S. resident. If you make this
choice, you can take the standard deduction. See Pub.
519 and Nonresident aliens and dual-status aliens in the
Form 1040 instructions for more information, including information on making the election to treat a nonresident or
dual-status alien spouse as a U.S. resident for the entire
tax year.
Decedent’s final return. A decedent’s final tax return
should reflect the standard deduction that the decedent
was entitled to claim at the time of their death. If the decedent wasn’t age 65 or older at the time of death, the higher
standard deduction for age can’t be claimed. See Death
before age 65, later.
Higher standard deduction for age (65 or older). If
you don’t itemize deductions, you are entitled to a higher
Publication 554 (2025)
Chapter 4
Deductions
19
standard deduction if you are age 65 or older at the end of
the year. You are considered age 65 on the day before
your 65th birthday. Therefore, you can take a higher standard deduction for 2025 if you were born before January 2,
1961.
Death before age 65. If you are preparing a return for
someone who died in 2025, consider the taxpayer to be
age 65 or older at the end of 2025 only if they were age 65
or older at the time of death. A taxpayer is considered age
65 on the day before their birthday.
Example. Your spouse was born on February 14,
1960, and died on February 13, 2025. Your spouse is considered age 65 at the time of death. However, if your
spouse died on February 12, 2025, your spouse isn’t considered age 65 at the time of death and isn’t age 65 or
older at the end of 2025.
Higher standard deduction for blindness. If you are
blind on the last day of the year and you don’t itemize deductions, you are entitled to a higher standard deduction.
Not totally blind. If you aren’t totally blind, you must get
a certified statement from an eye doctor (ophthalmologist
or optometrist) that:
• You can’t see better than 20/200 in the better eye with
glasses or contact lenses, or
• Your field of vision isn’t more than 20 degrees.
If your eye condition isn’t likely to improve beyond these
limits, the statement should include this fact. You must
keep the statement in your records.
If your vision can be corrected beyond these limits only
by contact lenses that you can wear only briefly because
of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify.
Spouse age 65 or older or blind. You can take the
higher standard deduction if your spouse is age 65 or
older or blind and:
• You file a joint return, or
• You file a separate return and your spouse had no
gross income and can’t be claimed as a dependent by
another taxpayer.
!
You can’t claim the higher standard deduction for
an individual other than yourself and your spouse.
CAUTION
are both over age 65, they enter $3,200 ($1,600 × 2) on
line 5. They enter $34,700 ($31,500 + $3,200) on line 6,
so their standard deduction is $34,700.
Standard Deduction for Dependents
The standard deduction for an individual who can be
claimed as a dependent on another person’s tax return is
generally limited to the greater of:
• $1,350, or
• The individual’s earned income for the year plus $450
(but not more than the regular standard deduction
amount).
However, the standard deduction may be higher if the
individual is age 65 or older or blind.
If you (or your spouse if filing jointly) can be claimed as
a dependent on someone else’s return, use Worksheet
4-1, if applicable, to determine your standard deduction.
Itemized Deductions
Some individuals should itemize their deductions because
it will save them money. Others should itemize because
they don’t qualify for the standard deduction. See the discussion under Standard Deduction, earlier, to decide if it
would be to your advantage to itemize deductions.
Medical and dental expenses, some taxes, certain interest expenses, charitable contributions, certain casualty
and theft losses, and certain other expenses may be itemized as deductions on Schedule A (Form 1040).
You may benefit from itemizing your deductions on
Schedule A (Form 1040) if you:
• Can’t take the standard deduction;
• Had uninsured medical or dental expenses that are
more than 7.5% of your adjusted gross income (AGI);
• Paid interest on a loan secured by your home and that
you used to buy, build, or improve your home;
• Paid real estate or personal property taxes;
• Paid state and local income taxes or general sales
taxes;
• Had large uninsured casualty or theft losses due to a
federally declared disaster;
Example. This example illustrates how to determine
your standard deduction using Worksheet 4-1.
Jean and Terry are filing a joint return for 2025. Both are
over age 65. Neither is blind, and neither can be claimed
as a dependent. They don’t itemize deductions, so they
use Worksheet 4-1. Because they are married filing jointly,
they enter $31,500 on line 1. They check the “No” box on
line 2, so they also enter $31,500 on line 4. Because they
See the Instructions for Schedule A (Form 1040) for
more information.
20
Deductions
Chapter 4
• Made large contributions to qualified charities (see
Pub. 526); or
• Have total itemized deductions that are more than the
standard deduction that applies to you.
Publication 554 (2025)
Worksheet 4-1. 2025 Standard Deduction Worksheet
Keep for Your Records
Caution: If you are married filing separately and your spouse itemizes deductions, if you file a tax return for a short year because of a change in
annual accounting period, or if you are a dual-status alien, don’t complete this worksheet.
If you were born before January 2, 1961, and/or you were blind at the end of 2025, check the correct box(es) below. Put the total
number of boxes checked in box c and go to line 1.
a.
You
Born before January 2, 1961
Blind
b.
Your spouse
c.
Total boxes checked
Born before January 2, 1961
1. Enter the amount shown below for your filing status.
• Single or married filing separately—$15,750
• Married filing jointly or qualifying surviving
spouse—$31,500
• Head of household—$23,625
Blind
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Can you (or your spouse if filing jointly) be claimed as a dependent on someone else’s return?
No. Skip line 3; enter the amount from line 1 on line 4.
Yes. Go to line 3.
3. Is your earned income* more than $900?
Yes. Add $450 to your earned income. Enter the total.
No. Enter $1,350.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Enter the smaller of line 1 or line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. If born before January 2, 1961, or blind, multiply the number in box c by $1,600 ($2,000 if single or head of
household). Enter the result here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.
6. Add lines 4 and 5. This is your standard deduction for 2025** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
* Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also
includes any taxable scholarship or fellowship grant. Generally, your earned income is the total of the amount(s) you reported on Form 1040 or
1040-SR, line 1z, and Schedule 1 (Form 1040), lines 3, 6, 8r, 8t, and 8u minus the amount, if any, on Schedule 1 (Form 1040), line 15.
** You may be able to increase the amount of your standard deduction on line 6 by a loss you suffered related to property in one of
the Presidentially declared disaster areas eligible for that relief. See Pub. 547 for more information.
Medical and Dental Expenses
You can deduct certain medical and dental expenses you
paid for yourself, your spouse, and your dependent(s) if
you itemize your deductions on Schedule A (Form 1040).
Table 4-1 shows some common items that you can or
can’t include in figuring your medical expense deduction.
For more information, see the following discussions of selected items, which are presented in alphabetical order. A
more extensive list of items and further details can be
found in Pub. 502.
You can deduct only the amount of your medical
and dental expenses that is more than 7.5% of
CAUTION your AGI.
!
What to include. Generally, you can include only the
medical and dental expenses you paid this year, regardless of when the services were provided. If you pay medical expenses by check, the day you mail or deliver the
check is generally the date of payment. If you use a
pay-by-phone or online account to pay your medical expenses, the date reported on the statement of the financial
institution showing when payment was made is the date of
payment. You can include medical expenses you charge
Publication 554 (2025)
Chapter 4
to your credit card in the year the charge is made. It
doesn’t matter when you actually pay the amount
charged.
Home Improvements
You can include in medical expenses amounts you pay for
home improvements if their main purpose is medical care
for you, your spouse, or your dependent(s).
Only reasonable costs to accommodate a home to your
disabled condition (or that of your spouse or your dependent(s) who lives with you) are considered medical care.
Additional costs for personal motives, such as for architectural or aesthetic reasons, aren’t medical expenses. Pub.
502 contains additional information and examples, including a capital expense worksheet, to assist you in figuring
the amount of the capital expense that you can include in
your medical expenses. Also, see Pub. 502 for information
about deductible operating and upkeep expenses related
to such capital expense items, and for information about
improvements, for medical reasons, to property rented by
a person with disabilities.
Deductions
21
Table 4-1. Medical and Dental Expenses Checklist
You can include:
• Bandages
• Capital expenses for
equipment or
improvements to your
home needed for
medical care (see Pub.
502)
• Certain weight-loss
expenses for obesity
• Diagnostic devices
• Expenses of an organ
donor
• Eye surgery—to promote
the correct function of
the eye
• Costs of buying and
maintaining guide dogs
or other service animals
aiding the blind, deaf,
and disabled
• Hospital services fees
(lab work, therapy,
nursing services,
surgery, etc.)
• Lead-based paint
removal (see Pub. 502)
• Long-term care
contracts, qualified (see
Pub. 502)
• Meals and lodging
provided by a hospital
during medical treatment
• Medical and hospital
insurance premiums
• Medical services fees
(from doctors, dentists,
surgeons, specialists,
and other medical
practitioners)
You can’t include:
• Medicare Part B and Part
D premiums
• Oxygen equipment and
oxygen
• Part of life-care fee paid
to retirement home
designated for medical
care
• Prescription medicines
(prescribed by a doctor)
and insulin
• Psychiatric and
psychological treatment
• Social security tax,
Medicare tax, FUTA tax,
and state employment
tax for worker providing
medical care (see Pub.
502)
• Special items (artificial
limbs, dentures,
eyeglasses, contact
lenses, hearing aids,
crutches, wheelchair,
etc.)
• Special education for
mentally or physically
disabled persons (see
Pub. 502)
• Stop-smoking programs
• Transportation for
needed medical care
• Treatment at a drug or
alcohol center (includes
meals and lodging
provided by the center)
• Wages for nursing
services (see Pub. 502)
Household Help
You can’t include in medical expenses the cost of household help, even if such help is recommended by a doctor.
This is a personal expense that isn’t deductible. However,
you may be able to include certain expenses paid to a person providing nursing-type services. For more information,
see Nursing Services, later. Also, certain maintenance or
personal care services provided for qualified long-term
care can be included in medical expenses. For more information, see Qualified long-term care services under
Long-Term Care, later.
Hospital Services
You can include in medical expenses amounts you pay for
the cost of inpatient care at a hospital or similar institution
if a principal reason for being there is to receive medical
care. This includes amounts paid for meals and lodging.
Also, see Meals and Lodging, later.
Long-Term Care
You can include in medical expenses amounts paid for
qualified long-term care services and certain amounts of
22
Chapter 4
• Bottled water
• Contributions to Archer
MSAs (see Pub. 969)
• Diaper service
• Expenses for your general
health (even if following
your doctor’s advice)
such as:
—Health club dues;
—Household help (even if
recommended by a
doctor);
—Social activities, such
as dancing or swimming
lessons; and
—Trip for general health
improvement
• Flexible spending
account reimbursements
for medical expenses (if
contributions were on a
pre-tax basis) (see Pub.
502)
• Funeral, burial, or
cremation expenses
• Health savings account
payments for medical
expenses (see Pub. 502)
• Illegal operation or
treatment
• Life insurance or income
protection policies, or
policies providing
payment for loss of life,
limb, sight, etc.
• Medical insurance
included in a car
insurance policy
covering all persons
injured in or by your car
• Medicine you buy
without a prescription
• Nursing care for a
healthy baby
• Prescription drugs you
brought in (or ordered
shipped) from another
country, in most cases
(see Pub. 502)
• Surgery for purely
cosmetic reasons (see
Pub. 502)
• Toothpaste, toiletries,
cosmetics, etc.
• Teeth whitening
• Weight-loss expenses
not for the treatment of
obesity or other disease
premiums paid for qualified long-term care insurance contracts.
Qualified long-term care services. Qualified long-term
care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services,
and maintenance and personal care services (defined
later) that are:
1. Required by a chronically ill individual, and
2. Provided under a plan of care prescribed by a licensed health care practitioner.
Chronically ill individual. An individual is chronically
ill if, within the previous 12 months, a licensed health care
practitioner has certified that the individual meets either of
the following descriptions.
1. The individual is unable to perform at least two activities of daily living without substantial assistance from
another individual for at least 90 days, due to a loss of
functional capacity. Activities of daily living are eating,
toileting, transferring, bathing, dressing, and continence.
2. The individual requires substantial supervision to be
protected from threats to health and safety due to severe cognitive impairment.
Deductions
Publication 554 (2025)
Maintenance and personal care services. Maintenance or personal care services are care that has as its
primary purpose the providing of a chronically ill individual
with needed assistance with their disabilities (including
protection from threats to health and safety due to severe
cognitive impairment).
Qualified long-term care insurance contracts. A
qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified
long-term care services. The contract must:
1. Be guaranteed renewable;
2. Not provide for a cash surrender value or other money
that can be paid, assigned, pledged, or borrowed;
3. Provide that refunds, other than refunds on the death
of the insured or complete surrender or cancellation of
the contract, and dividends under the contract must
be used only to reduce future premiums or increase
future benefits; and
4. Generally not pay or reimburse expenses incurred for
services or items that would be reimbursed under
Medicare, except where Medicare is a secondary
payer, or the contract makes per diem or other periodic payments without regard to expenses.
The amount of qualified long-term care premiums you
can include is limited. You can include the following as
medical expenses on Schedule A (Form 1040).
1. Qualified long-term care premiums up to the following
amounts.
a. Age 40 or under—$480.
b. Age 41 to 50—$900.
cumstances.
• There is no significant element of personal pleasure,
recreation, or vacation in the travel away from home.
The amount you include in medical expenses for lodging can’t be more than $50 per night for each person. You
can include lodging for a person traveling with the person
receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. (Meals aren’t included.)
Nursing home. You can include in medical expenses the
cost of medical care in a nursing home or a home for the
aged for yourself, your spouse, or your dependent(s). This
includes the cost of meals and lodging in the home if a
main reason for being there is to get medical care.
Don’t include the cost of meals and lodging if the reason for being in the home is personal. However, you can
include in medical expenses the part of the cost that is for
medical or nursing care.
Medical Insurance Premiums
You can include in medical expenses insurance premiums
you pay for policies that cover medical care. Policies can
provide payment for:
• Hospitalization, surgical fees, X-rays;
• Prescription drugs and insulin;
• Dental care;
• Replacement of lost or damaged contact lenses; and
• Qualified long-term care insurance contracts (subject
to the additional limits included in the discussion on
qualified long-term care insurance contracts under
Long-Term Care, earlier).
c. Age 51 to 60—$1,800.
d. Age 61 to 70—$4,810.
e. Age 71 or over—$6,020.
2. Unreimbursed expenses for qualified long-term care
services.
Note: The limit on premiums is for each person.
Meals and Lodging
You can include in medical expenses the cost of meals
and lodging at a hospital or similar institution if your main
reason for being there is to receive medical care.
You may be able to include in medical expenses the
cost of lodging (but not meals) not provided in a hospital
or similar institution. You can include the cost of such
lodging while away from home if all of the following requirements are met.
• The lodging is primarily for, and essential to, medical
care.
• The medical care is provided by a doctor in a licensed
hospital or in a medical care facility related to, or the
equivalent of, a licensed hospital.
Publication 554 (2025)
• The lodging isn’t lavish or extravagant under the cir-
Chapter 4
If you have a policy that provides payments for other
than medical care, you can include the premiums for the
medical care part of the policy if the charge for the medical part is reasonable. The cost of the medical portion
must be separately stated in the insurance contract or
given to you in a separate statement.
Medicare Part A. If you are covered under social security
(or if you are a government employee who paid Medicare
tax), you are enrolled in Medicare Part A. The payroll tax
paid for Medicare Part A isn’t a medical expense. If you
aren’t covered under social security (or weren’t a government employee who paid Medicare tax), you can enroll
voluntarily in Medicare Part A. In this situation, you can include the premiums you paid for Medicare Part A as a
medical expense.
Medicare Part B. Medicare Part B is a supplemental
medical insurance. Premiums you pay for Medicare Part B
are a medical expense. Check the information you received from the SSA to find out your premium.
Social security beneficiaries may quickly and easily obtain various information from the SSA’s website with a my
Deductions
23
Social Security account, including getting a replacement
Form SSA-1099 or SSA-1042S. For more information, see
Obtaining social security information, earlier.
Medicare Part D. Medicare Part D is a voluntary prescription drug insurance program for persons with Medicare Part A or Part B. You can include as a medical expense premiums you pay for Medicare Part D.
Prepaid insurance premiums. Insurance premiums you
pay before you are age 65 for medical care for yourself,
your spouse, or your dependent(s) after you reach age 65
are medical care expenses in the year paid if they are:
• Payable in equal yearly installments or more often;
and
• Payable for at least 10 years, or until you reach age 65
(but not for less than 5 years).
Employment taxes. You can include as a medical expense social security tax, FUTA tax, Medicare tax, and
state employment taxes you pay for a nurse, attendant, or
other person who provides medical care. If the attendant
also provides personal and household services, you can
include as a medical expense only the amount of employment taxes paid for medical services as explained earlier
under Nursing Services. For information on employment
tax responsibilities of household employers, see Pub. 926.
Transportation
Medicines
You can include in medical expenses amounts you pay for
prescribed medicines and drugs. A prescribed drug is one
that requires a prescription by a doctor for its use by an individual. You can also include amounts you pay for insulin.
Except for insulin, you can’t include in medical expenses
amounts you pay for a drug that isn’t prescribed.
Imported medicines and drugs. If you import medicines or drugs from other countries, see Medicines and
Drugs From Other Countries under What Expenses Aren’t
Includible? in Pub. 502.
Nursing Services
You can include in medical expenses wages and other
amounts you pay for nursing services. The services need
not be performed by a nurse as long as the services are of
a kind generally performed by a nurse. This includes services connected with caring for the patient’s condition, such
as giving medication or changing dressings, as well as
bathing and grooming the patient. These services can be
provided in your home or another care facility.
Generally, only the amount spent for nursing services is
a medical expense. If the attendant also provides personal
and household services, amounts paid to the attendant
must be divided between the time spent performing
household and personal services and the time spent for
nursing services. However, certain maintenance or personal care services provided for qualified long-term care
can be included in medical expenses. See Maintenance
and personal care services under Qualified long-term care
services, earlier. Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and
dependent care credit. See Child and Dependent Care
Credit, later, and Pub. 503.
You can also include in medical expenses part of the
amount you pay for that attendant’s meals. Divide the food
expense among the household members to find the cost
24
of the attendant’s food. Then, divide that cost in the same
manner as in the preceding paragraph. If you had to pay
additional amounts for household upkeep because of the
attendant, you can include the extra amounts with your
medical expenses. This includes extra rent or utilities you
pay because you moved to a larger apartment to provide
space for the attendant.
Chapter 4
You can include in medical expenses amounts paid for
transportation primarily for, and essential to, medical care.
Car expenses. You can include out-of-pocket expenses,
such as the cost of gas and oil, when you use a car for
medical reasons. You can’t include depreciation, insurance, general repair, or maintenance expenses.
If you don’t want to use your actual expenses for 2025,
you can use the standard medical mileage rate of 21 cents
a mile.
You can also include parking fees and tolls. You can
add these fees and tolls to your medical expenses
whether you use actual expenses or use the standard
mileage rate.
You can also include:
• Bus, taxi, train, or plane fares or ambulance service;
and
• Transportation expenses of a nurse or other person
who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone.
Don’t include transportation expenses if, for purely
personal reasons, you choose to travel to another
CAUTION city for an operation or other medical care prescribed by your doctor.
!
Enhanced Deduction for
Seniors
Taxpayers who are age 65 or older may be eligible for the
enhanced deduction for seniors. This deduction is in addition to the higher standard deduction for taxpayers age 65
or older discussed under Higher standard deduction for
age (65 or older), earlier. The maximum amount of the deduction is $6,000 ($12,000 if married filing jointly and both
spouses are eligible). The deduction will be limited if your
Deductions
Publication 554 (2025)
modified adjusted gross income is more than $75,000
($150,000 if married filing jointly).
Qualified individuals can claim the enhanced de-
TIP duction for seniors whether they claim the standard deduction or itemize deductions.
The special rules that apply to U.S. nationals; residents of Canada, Mexico, and South Korea; and
CAUTION residents of India who were students or business
apprentices don't apply to the enhanced deduction for seniors. See Pub. 519 for more information.
!
To be eligible to claim the enhanced deduction for seniors:
• You (and/or your spouse if filing a joint return) must
have been born before January 2, 1961;
• You must have a valid SSN. If you are married filing
jointly, the spouse who is claiming the enhanced deduction for seniors must have a valid SSN; and
• If you are married you must file a joint return with your
spouse.
Valid SSN. You and/or your spouse must have a valid
SSN to take this deduction. A valid SSN for purposes of
the enhanced deduction for seniors is one that is valid for
employment and that is issued by the SSA before the due
date of your 2025 return (including extensions).
For more information, see the Instructions for Form
1040.
earned income credit. You may be able to reduce your
federal income tax by claiming one or more of these credits. You may also be able to increase your refund by claiming the earned income credit.
Credit for the Elderly or the
Disabled
This section explains who qualifies for the credit for the
elderly or the disabled and how to figure this credit. For
more information, see the Instructions for Schedule R
(Form 1040).
You can take the credit only if you file Form 1040
or 1040-SR. You can’t take the credit if you file
CAUTION Form 1040-NR.
!
Can You Take the Credit?
You can take the credit for the elderly or the disabled if you
meet both of the following requirements.
• You are a qualified individual.
• Your income isn’t more than certain limits.
You can use Figure 5-A and Figure 5-B as guides to see if
you are eligible for the credit.
5.
Credits
This chapter briefly discusses the credit for the elderly or
the disabled, the child and dependent care credit, and the
Publication 554 (2025)
Chapter 5
Credits
25
Figure 5-A. Are You a Qualified Individual?
START HERE
Did you live with your
spouse at any time
1
during the tax year?
Yes
Are you filing a joint
return with your spouse?
Yes
No
Yes
No
Were you married at the end of the tax
year?
No
Are you a U.S. citizen or resident alien? 2
Yes
No
Were you 65 or older at the end of
the tax year?
You aren’t a qualified
individual and can’t
take the credit for the
elderly or the disabled.
Yes
No
No
You are a qualified
individual and may be able
to take the credit for the
elderly or the disabled
unless your income
exceeds the limits in
Figure 5-B.
Are you retired on permanent and
total disability?
Yes
Yes
Did you reach mandatory retirement
age before the tax year? 3
No
No
1
Did you receive taxable disability
benefits during the tax year?
Yes
However, you may be able to claim this credit even if you lived with your spouse during the first 6 months of the tax year, as long as you qualify to file as head of
household. You qualify to file as head of household if you are considered unmarried and meet certain other conditions. See Pub. 501 for more information.
2 If you were a nonresident alien at any time during the tax year and were married to a U.S. citizen or resident alien at the end of the tax year, see U.S. Citizen or
Resident Alien under Qualified Individual. If you and your spouse choose to treat you as a U.S. resident alien, answer “Yes” to this question.
3
Mandatory retirement age is the age set by your employer at which you would have been required to retire, had you not become disabled.
Qualified Individual
You are a qualified individual for this credit if you are a U.S.
citizen or resident alien, and either of the following applies.
1. You were age 65 or older at the end of 2025.
2. You were under age 65 at the end of 2025 and all
three of the following statements are true.
a. You retired on permanent and total disability (explained later).
b. You received taxable disability income for 2025.
c. On January 1, 2025, you had not reached mandatory retirement age (defined later under Disability
income).
Age 65. You are considered to be age 65 on the
TIP day before your 65th birthday. As a result, if you
were born on January 1, 1961, you are considered to be age 65 at the end of 2025.
U.S. citizen or resident alien. You must be a U.S. citizen
or resident alien (or be treated as a resident alien) to take
the credit. Generally, you can’t take the credit if you were a
nonresident alien at any time during the tax year.
Exceptions. If you are a nonresident alien, you may be
able to take the credit if your spouse is a U.S. citizen or
26
Chapter 5
resident at the end of the tax year, you file a joint return,
and you and your spouse elect to treat you as a U.S. resident for the entire year. This choice remains in effect in
subsequent years until terminated. You and your spouse
can also choose to file as U.S. residents for the entire year
if both of you are U.S. citizens or residents at the end of
the year and either (or both) of you were a nonresident at
the beginning of the year (the dual-status spouse(s)). You
can only make this choice for 1 year, and it does not apply
to any future years. For information on these choices, see
the Instructions for Form 1040 and chapter 1 of Pub. 519.
If you were a nonresident alien at the beginning of the
year and a resident alien at the end of the year, and you
were married to a U.S. citizen or resident alien at the end
of the year, you may be able to choose to be treated as a
U.S. resident alien for the entire year. In that case, you
may be allowed to take the credit.
For information on these choices, see chapter 1 of Pub.
519.
Married persons. Generally, if you are married at the
end of the tax year, you and your spouse must file a joint
return to take the credit. However, if you and your spouse
didn’t live in the same household at any time during the
tax year, you can file either a joint return or separate returns and still take the credit.
Credits
Publication 554 (2025)
Figure 5-B. Income Limits
THEN even if you qualify (see Figure 5-A), you CAN’T take the credit if:
IF your filing status is...
The amount on your Form 1040 or
1040-SR, line 11a, is equal to or more
than...
OR the total of your nontaxable social
security and other nontaxable pension(s),
annuities, or disability income is equal to or
more than...
single, head of household, or qualifying
surviving spouse
$17,500
$5,000.
married filing jointly and only one spouse
qualifies in Figure 5-A
$20,000
$5,000.
married filing jointly and both spouses qualify in
Figure 5-A
$25,000
$7,500.
married filing separately and you lived apart
from your spouse for all of 2025
$12,500
$3,750.
Head of household. You can file as head of household
and qualify to take the credit even if your spouse lived with
you during the first 6 months of the year if you meet certain tests. See Pub. 501 and the Instructions for Schedule R (Form 1040).
nature of the work you perform may show that you are
able to engage in substantial gainful activity.
The fact that you haven’t worked or have been unemployed for some time isn’t, of itself, conclusive evidence
that you can’t engage in substantial gainful activity.
Under age 65. If you are under age 65 at the end of
2025, you can qualify for the credit only if you are retired
on permanent and total disability and have taxable disability income (discussed later under Disability income). You
are considered to be under age 65 at the end of 2025 if
you were born after January 1, 1961. You are retired on
permanent and total disability if:
Physician’s statement. If you are under age 65, you
must have your physician complete a statement certifying
that you were permanently and totally disabled on the
date you retired.
You don’t have to file this statement with your tax return,
but you must keep it for your records. The Instructions for
Schedule R (Form 1040) include a statement your physician can complete and that you can keep for your records.
• You were permanently and totally disabled when you
retired, and
• You retired on disability before the end of the tax year.
Even if you don’t retire formally, you may be considered
retired on disability when you have stopped working because of your disability. If you retired on disability before
1977, and weren’t permanently and totally disabled at the
time, you can qualify for the credit if you were permanently
and totally disabled on January 1, 1976, or January 1,
1977.
Permanent and total disability. You are permanently
and totally disabled if you can’t engage in any substantial
gainful activity because of your physical or mental condition. A physician must certify that the condition has lasted
or can be expected to last continuously for 12 months or
more, or that the condition can be expected to result in
death. See Physician’s statement, later.
Substantial gainful activity. Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work
generally done for pay or profit.
Full-time work (or part-time work done at the employer’s
convenience) in a competitive work situation for at least
the minimum wage conclusively shows that you are able
to engage in substantial gainful activity.
Substantial gainful activity isn’t work you do to take care
of yourself or your home. It isn’t unpaid work on hobbies,
institutional therapy or training, school attendance, clubs,
social programs, and similar activities. However, the
Publication 554 (2025)
Chapter 5
Veterans. If the VA certifies that you are permanently
and totally disabled, you can substitute VA Form 21-0172,
Certification of Permanent and Total Disability, for the
physician’s statement you are required to keep. VA Form
21-0172 must be signed by a person authorized by the VA
to do so. You can get this form from your local VA regional
office.
Physician’s statement obtained in earlier year. If
you got a physician’s statement in an earlier year and, due
to your continued disability, you were unable to engage in
any substantial gainful activity during 2025, you may not
need to get another physician’s statement for 2025. For a
detailed explanation of the conditions you must meet, see
the instructions for Schedule R (Form 1040), Part II. If you
meet the required conditions, you must check the box on
Schedule R (Form 1040), Part II, line 2.
If you checked Schedule R (Form 1040), Part I, box 4,
5, or 6, enter in the space above the box in Part II, line 2,
the first name(s) of the spouse(s) for whom the box is
checked.
Disability income. If you are under age 65, you must
also have taxable disability income to qualify for the credit.
Disability income must meet the following two requirements.
• It must be paid under your employer’s accident or
health plan or pension plan.
Credits
27
• It must be included in your income as wages (or payments in lieu of wages) for the time you are absent
from work because of permanent and total disability.
Payments that aren’t disability income. Any payment you receive from a plan that doesn’t provide for disability retirement isn’t disability income. Any lump-sum payment for accrued annual leave that you receive when you
retire on disability is a salary payment and isn’t disability
income.
For purposes of the credit for the elderly or the disabled, disability income doesn’t include amounts you receive after you reach mandatory retirement age. Mandatory retirement age is the age set by your employer at
which you would have had to retire had you not become
disabled.
Figuring the Credit
You can figure the credit yourself or allow the IRS to figure
it for you.
Figuring the credit yourself. You can figure the credit
yourself by completing Schedule R (Form 1040).
Credit figured for you. If you can take the credit and you
want the IRS to figure the credit for you, see the Instructions for Schedule R (Form 1040). If you want the IRS to
figure your tax, see chapter 13 of Pub. 17.
• Medicaid.
• SSI.
• Supplemental Nutrition Assistance Program (SNAP)
(food stamps).
• Low-income housing.
• Temporary Assistance for Needy Families (TANF).
In addition, when determining eligibility, the refund can’t
be counted as a resource for at least 12 months after you
receive it. Check with your local benefit coordinator to find
out if your refund will affect your benefits.
Do You Qualify for the EIC?
Use Table 5-1 as a starting point to the rules you must
meet in order to qualify for the EIC. The specific rules you
must meet depend on whether you have a qualifying child.
• If you have a qualifying child, the rules in Parts A, B,
and D apply to you.
• If you don’t have a qualifying child, the rules in Parts A,
C, and D apply to you.
If you think you may qualify for the credit after reading all
the rules in each part, see Pub. 596 for more details about
the EIC. You can also find information about the EIC in the
instructions for Form 1040, line 27a.
Child and Dependent Care
Credit
You may be able to claim this credit if you pay someone to
care for your dependent who is under age 13 or for your
spouse or dependent who isn’t able to care for themselves. The credit can be up to 35% of your expenses. To
qualify, you must pay these expenses so you can work or
look for work.
If you claim this credit, you must include on your
return the name and taxpayer identification numCAUTION ber (generally, the social security number) of each
qualifying person for whom care is provided. You must
also show on your return the name, address, and taxpayer
identification number of the person(s) or organization(s)
that provided the care. If the correct information isn’t
shown, the credit may be reduced or disallowed.
!
For more information, see Pub. 503.
Earned Income Credit (EIC)
The EIC is a refundable tax credit for certain people who
work and have earned income under $68,675. The EIC is
available to persons with or without a qualifying child.
Credit has no effect on certain welfare benefits. Any
refund you receive because of the EIC can’t be counted
28
as income when determining whether you or anyone else
is eligible for benefits or assistance, or how much you or
anyone else can receive, under any federal program or under any state or local program financed in whole or in part
with federal funds. These programs include the following.
Chapter 5
The sections that follow provide additional information
for some of the rules.
Adjusted gross income (AGI). Under Rule 1, you can’t
claim the EIC unless your AGI is less than the applicable
limit shown in Part A of Table 5-1. Your AGI is the amount
on line 11a of Form 1040 or 1040-SR.
Social security number (SSN). Under Rule 2, you (and
your spouse if married filing jointly) must have a valid SSN
issued by the SSA. Any qualifying child listed on Schedule EIC must also have a valid SSN. (See Qualifying child,
later, if you have a qualifying child.)
An SSN is valid for the EIC unless it was issued after
the due date of your 2025 return (including extensions) or
it was issued solely to apply for or receive a federally funded benefit and does not authorize you to work. An example of a federally funded benefit is Medicaid.
Investment income. Under Rule 6, you can’t claim the
EIC unless your investment income is $11,950 or less. If
your investment income is more than $11,950, you can’t
claim the credit. For most people, investment income is
the total of the following amounts.
• Taxable interest (line 2b of Form 1040 or 1040-SR).
• Tax-exempt interest (line 2a of Form 1040 or
1040-SR).
Credits
Publication 554 (2025)
Table 5-1. Earned Income Credit (EIC) in a Nutshell
First, you must meet all the rules in this
column.
Part A.
Rules for Everyone
1. Your adjusted gross
income (AGI) must be
less than:
•$61,555 ($68,675 for
married filing jointly) if
you have three or
more qualifying
children who have
valid SSNs,
•$57,310 ($64,430 for
married filing jointly) if
you have two
qualifying children who
have valid SSNs,
•$50,434 ($57,554 for
married filing jointly) if
you have one
qualifying child who
has a valid SSN, or
•$19,104 ($26,214 for
married filing jointly) if
you don’t have a
qualifying child who
has a valid SSN.
2. You must have a
valid SSN by the due
date of your 2025
return (including
extensions).
3. You must meet
certain requirements
if you are separated
from your spouse and
not filing a joint return.
4. You must be a U.S.
citizen or resident
alien all year.
(However, see Pub.
596 if your filing
status is married filing
jointly.)
5. You can’t file Form
2555 (relating to
foreign earned
income).
6. Your investment
income must be
$11,950 or less.
7. You must have
earned income.
Second, you must meet all the rules in
one of these columns, whichever applies.
Third, you must meet
the rule in this column.
Part B.
Rules if You Have a
Qualifying Child
Part C.
Rules if You Don’t
Have a Qualifying
Child
Part D.
Figuring and Claiming
the EIC
8. Your child must meet
the relationship, age,
residency, and joint
return tests.
9. Your qualifying child
can’t be used by more
than one person to
claim the EIC.
10. You can’t be a
qualifying child of
another person.
11. You must meet
the age
requirements.
12. You can’t be the
dependent of
another person.
13. You can’t be a
qualifying child of
another person.
14. You must have
lived in the United
States more than
half of the year.
15. Your earned income
must be less than:
•$61,555 ($68,675 for
married filing jointly) if you
have three or more
qualifying children who
have valid SSNs,
•$57,310 ($64,430 for
married filing jointly) if you
have two qualifying
children who have valid
SSNs,
•$50,434 ($57,554 for
married filing jointly) if you
have one qualifying child
who has a valid SSN, or
•$19,104 ($26,214 for
married filing jointly) if you
don’t have a qualifying
child who has a valid SSN.
• Dividend income (line 3b of Form 1040 or 1040-SR).
• Capital gain net income (line 7a of Form 1040 or
1040-SR, if more than zero).
For more information about investment income, see
Pub. 596.
Earned income. Under Rule 7, you must have earned income to claim the EIC. Under Rule 15, you can’t claim the
EIC unless your earned income is less than the applicable
limit shown in Table 5-1, Part D. Earned income includes
all of the following types of income.
1. Wages, salaries, tips, and other taxable employee
pay. Employee pay is earned income only if it is taxable. Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, isn’t
earned income. But there is an exception for nontaxable combat pay, which you can choose to include in
earned income.
2. Net earnings from self-employment.
3. Gross income received as a statutory employee.
Gross income defined. “Gross income” means all income you received in the form of money, goods, property,
and services that isn’t exempt from tax, including any inPublication 554 (2025)
Chapter 5
come from sources outside the United States or from the
sale of your main home (even if you can exclude part or all
of it). Don’t include any social security benefits unless (a)
you are married filing a separate tax return and you lived
with your spouse at any time in 2025, or (b) one-half of
your social security benefits plus your other gross income
and any tax-exempt interest is more than $25,000
($32,000 if married filing jointly). If (a) or (b) applies, see
the instructions for Form 1040, lines 6a and 6b, to figure
the taxable part of social security benefits you must include in gross income.
Self-employed persons. If you are self-employed and
your net earnings are $400 or more, be sure to correctly fill
out Schedule SE (Form 1040), Self-Employment Tax, and
pay the proper amount of self-employment tax. If you
don’t, you may not get all the credit to which you are entitled.
Disability benefits. If you retired on disability, taxable
benefits you receive under your employer’s disability retirement plan are considered earned income until you
reach minimum retirement age. Minimum retirement age is
generally the earliest age at which you could have received a pension or annuity if you weren’t disabled. Beginning on the day after you reach minimum retirement age,
Credits
29
payments you receive are taxable as a pension and aren’t
considered earned income.
Payments you received from a disability insurance policy that you paid the premiums for aren’t earned income. It
doesn’t matter whether you have reached minimum retirement age. If this policy is through your employer, the
amount may be shown in box 12 of your Form W-2 with
code J.
1. Have the IRS figure the EIC for you. If you want to do
this, see IRS Will Figure the EIC for You in Pub. 596.
Income that isn’t earned income. Examples of items
that aren’t earned income under Rule 7 include:
6.
• Interest and dividends;
• Pensions and annuities;
• Social security and railroad retirement benefits (in-
cluding disability benefits—except for payments covered under Disability benefits, earlier);
• Alimony and child support;
• Welfare benefits;
• Workers’ compensation benefits;
• Unemployment compensation (insurance);
• Nontaxable foster care payments; and
• Veterans’ benefits, including VA rehabilitation payments.
Don’t include any of these items in your earned income.
Workfare payments. Nontaxable workfare payments
aren’t earned income for the EIC. These are cash payments certain people receive from a state or local agency
that administers public assistance programs funded under
the federal TANF program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private
sector employment isn’t available, or (2) community service program activities.
Qualifying child. Under Rule 8, your child is a qualifying
child if your child meets four tests. The four tests are:
1. Relationship,
2. Age,
2. Figure the EIC yourself. If you want to do this, see
How To Figure the EIC Yourself in Pub. 596.
Estimated Tax
Estimated tax is a method used to pay tax on income that
isn’t subject to withholding. This income includes self-employment income, interest, dividends, alimony, rent, gains
from the sale of assets, prizes, and awards.
Income tax is generally withheld from pensions and annuity payments you receive. However, if the tax withheld from
your pension (or other) income isn’t enough, you may
have to pay estimated tax. If you don’t pay enough tax
through withholding, by making estimated tax payments,
or both, you may be charged a penalty.
Who Must Make Estimated Tax
Payments
If you had a tax liability for 2025, you may have to pay estimated tax for 2026. In most cases, you must pay estimated tax for 2026 if both of the following apply.
1. You expect to owe at least $1,000 in tax for 2026, after
subtracting your withholding and tax credits.
2. You expect your withholding and tax credits to be less
than the smaller of:
• 90% of the tax to be shown on your 2026 tax return, or
• 100% of the tax shown on your 2025 tax return. The
2025 tax return must cover all 12 months.
3. Joint return, and
4. Residency.
The four tests are illustrated in Figure 5-C. See Pub.
596 for more information about each test.
If all of your income is subject to income tax withholding
and enough tax is withheld, you probably don’t need to
make estimated tax payments.
For more information on estimated tax, see Pub. 505.
Figuring the EIC
To figure the amount of your credit, you have two choices.
30
Chapter 6
Estimated Tax
Publication 554 (2025)
Figure 5-C. Tests for Qualifying Child
A qualifying child is your...
Son, daughter, stepchild, foster child,
or a descendant of any of them (for example, your grandchild)
OR
Brother, sister, half brother, half sister, stepbrother,
stepsister, or a descendant of any of them (for example, your
niece or nephew)
AND
was...
Under age 19 at the end of 2025 and younger than you (or your spouse if filing jointly)
OR
Under age 24 at the end of 2025, a full-time student, and younger than you (or your spouse if filing jointly)
OR
Permanently and totally disabled at any time during the year, regardless of age
AND
who...
Isn’t filing a joint return for 2025
(or is filing a joint return for 2025 only to claim a refund of income tax withheld or estimated tax paid)
AND
who...
Lived with you in the United States for more than half
of 2025.
If the child didn’t live with you for the
required time, see Pub. 596 for more information.
Publication 554 (2025)
31
How To Get Tax Help
If you have questions about a tax issue; need help preparing your tax return; or want to download free publications,
forms, or instructions, go to IRS.gov to find resources that
can help you right away.
Tax reform. Tax reform legislation impacting federal
taxes, credits, and deductions was enacted in P.L. 119-21,
commonly known as the One Big Beautiful Bill Act, on July
4, 2025. Go to IRS.gov/OBBB for more information and
updates on how this legislation affects your taxes.
Preparing and filing your tax return. After receiving all
your wage and earnings statements (Forms W-2, W-2G,
1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
compensation statements (by mail or in a digital format) or
other government payment statements (Form 1099-G);
and interest, dividend, and retirement statements from
banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you
qualify for free tax preparation, or hire a tax professional to
prepare your return.
Free options for tax preparation. Your options for preparing and filing your return online or in your local community, if you qualify, include the following.
• Free File. This program lets you prepare and file your
federal individual income tax return for free using software or Free File Fillable Forms. However, state tax
preparation may not be available through Free File. Go
to IRS.gov/FreeFile to see if you qualify for free online
federal tax preparation, e-filing, and direct deposit or
payment options.
• VITA. The Volunteer Income Tax Assistance (VITA)
program offers free tax help to people with
low-to-moderate incomes, persons with disabilities,
and limited-English-speaking taxpayers who need
help preparing their own tax returns. Go to IRS.gov/
VITA, download the free IRS2Go app, or call
800-906-9887 for information on free tax return preparation.
• TCE. The Tax Counseling for the Elderly (TCE) pro-
gram offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors.
Go to IRS.gov/TCE or download the free IRS2Go app
for information on free tax return preparation.
• MilTax. Members of the U.S. Armed Forces and quali-
fied veterans may use MilTax, a free tax service offered by the Department of Defense through Military
OneSource. For more information, go to
MilitaryOneSource (MilitaryOneSource.mil/MilTax).
Also, the IRS offers Free Fillable Forms, which can
be completed online and then e-filed regardless of income.
32
Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following.
• The Earned Income Tax Credit Assistant (IRS.gov/
EITCAssistant) determines if you’re eligible for the
earned income credit (EITC).
• The Online EIN Application (IRS.gov/EIN) helps you
get an employer identification number (EIN) at no
cost.
• The Tax Withholding Estimator (IRS.gov/W4App)
makes it easier for you to estimate the federal income
tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.
• The Sales Tax Deduction Calculator (IRS.gov/
SalesTax) figures the amount you can claim if you
itemize deductions on Schedule A (Form 1040).
Getting answers to your tax questions. On
IRS.gov, you can get up-to-date information on
current events and changes in tax law.
• IRS.gov/Help: A variety of tools to help you get answers to some of the most common tax questions.
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input, provide answers on a number of tax topics.
• IRS.gov/Forms: Find forms, instructions, and publica-
tions. You will find details on the most recent tax
changes and interactive links to help you find answers
to your questions.
• You may also be able to access tax information in your
e-filing software.
Need someone to prepare your tax return? There are
various types of tax return preparers, including enrolled
agents, certified public accountants (CPAs), accountants,
and many others who don’t have professional credentials.
If you choose to have someone prepare your tax return,
choose that preparer wisely. A paid tax preparer is:
• Primarily responsible for the overall substantive accuracy of your return,
• Required to sign the return, and
• Required to include their preparer tax identification
number (PTIN).
Although the tax preparer always signs the return,
you’re ultimately responsible for providing all the
CAUTION information required for the preparer to accurately
prepare your return and for the accuracy of every item reported on the return. Anyone paid to prepare tax returns
for others should have a thorough understanding of tax
matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.
!
Employers can register to use Business Services Online. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure
W-2 filing options to CPAs, accountants, enrolled agents,
Publication 554 (2025)
and individuals who process Form W-2, Wage and Tax
Statement; and Form W-2c, Corrected Wage and Tax
Statement.
Business tax account. If you are a sole proprietor, a
partnership, an S corporation, a C corporation, or a single-member limited liability company (LLC), you can view
your tax information on record with the IRS and do more
with a business tax account. Go to IRS.gov/
BusinessAccount for more information.
IRS social media. Go to IRS.gov/SocialMedia to see the
various social media tools the IRS uses to share the latest
information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our
highest priority. We use these tools to share public information with you. Don’t post your social security number
(SSN) or other confidential information on social media
sites. Always protect your identity when using any social
networking site.
The following IRS YouTube channels provide short, informative videos on various tax-related topics in English
and ASL.
• Youtube.com/irsvideos.
• Youtube.com/irsvideosASL.
Over-the-Phone Interpreter (OPI) Service. The IRS offers the OPI Service to taxpayers needing language interpretation. The OPI Service is available at Taxpayer Assistance Centers (TACs), most IRS offices, and every
VITA/TCE tax return site. This service is available in Spanish, Mandarin, Cantonese, Korean, Vietnamese, Russian,
and Haitian Creole.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all the forms, instructions, and publications you may need. Or you can go to
IRS.gov/OrderForms to place an order.
Mobile-friendly forms. You’ll need an IRS Online Account (OLA) to complete mobile-friendly forms that require
signatures. You’ll have the option to submit your form(s)
online or download a copy for mailing. You’ll need scans of
your documents to support your submission. Go to
IRS.gov/MobileFriendlyForms for more information.
Getting tax publications and instructions in eBook
format. Download and view most tax publications and instructions (including the Instructions for Form 1040) on
mobile devices as eBooks at IRS.gov/eBooks.
IRS eBooks have been tested using Apple’s iBooks for
iPad. Our eBooks haven’t been tested on other dedicated
eBook readers, and eBook functionality may not operate
as intended.
Access your online account (individual taxpayers
only). Go to IRS.gov/Account to securely access information about your federal tax account.
• View the amount you owe and a breakdown by tax
year.
• See payment plan details or apply for a new payment
plan.
• Make a payment or view 5 years of payment history
and any pending or scheduled payments.
• Access your tax records, including key data from your
most recent tax return, and transcripts.
• View digital copies of select notices from the IRS.
• Approve or reject authorization requests from tax pro-
Accessibility Helpline available for taxpayers with
disabilities. Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and
future accessibility products and services available in alternative media formats (for example, braille-ready, large
print, audio, etc.). The Accessibility Helpline does not
have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/
LetUsHelp.
Get a transcript of your return. With an online account,
you can access a variety of information to help you during
the filing season. You can get a transcript, review your
most recently filed tax return, and get your adjusted gross
income. Create or access your online account at IRS.gov/
Account.
Alternative media preference. Form 9000, Alternative
Media Preference, or Form 9000(SP) allows you to elect to
receive certain types of written correspondence in the following formats.
Tax Pro Account. This tool lets your tax professional
submit an authorization request to access your individual
taxpayer IRS OLA. For more information, go to IRS.gov/
TaxProAccount.
• Standard Print.
• Large Print.
• Braille.
• Audio (MP3).
• Plain Text File (TXT).
• Braille-Ready File (BRF).
Using direct deposit. The safest and easiest way to receive a tax refund is to e-file and choose direct deposit,
which securely and electronically transfers your refund directly into your financial account. Direct deposit also
avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in
10 taxpayers use direct deposit to receive their refunds. If
you don’t have a bank account, go to IRS.gov/
DirectDeposit for more information on where to find a bank
or credit union that can open an account online.
Disasters. Go to IRS.gov/DisasterRelief to review the
available disaster tax relief.
Publication 554 (2025)
fessionals.
33
Reporting and resolving your tax-related identity
theft issues.
• Check or Money Order: Mail your payment to the ad-
• Tax-related identity theft happens when someone
• Cash: You may be able to pay your taxes with cash at
steals your personal information to commit tax fraud.
Your taxes can be affected if your SSN is used to file a
fraudulent return or to claim a refund or credit.
• The IRS doesn’t initiate contact with taxpayers by
email, text messages (including shortened links), telephone calls, or social media channels to request or
verify personal or financial information. This includes
requests for personal identification numbers (PINs),
passwords, or similar information for credit cards,
banks, or other financial accounts.
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft
Central webpage, for information on identity theft and
data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or
stolen or you suspect you’re a victim of tax-related
identity theft, you can learn what steps you should
take.
• Get an Identity Protection PIN (IP PIN). IP PINs are
six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your
SSN. To learn more, go to IRS.gov/IPPIN.
dress listed on the notice or instructions.
a participating retail store.
• Same-Day Wire: You may be able to do same-day
wire from your financial institution. Contact your financial institution for availability, cost, and time frames.
Note: The IRS uses the latest encryption technology to
ensure that the electronic payments you make online, by
phone, or from a mobile device using the IRS2Go app are
safe and secure. Paying electronically is quick and easy.
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options.
• Apply for an online payment agreement (IRS.gov/
OPA) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once
you complete the online process, you will receive immediate notification of whether your agreement has
been approved.
• Use the Offer in Compromise Pre-Qualifier to see if
you can settle your tax debt for less than the full
amount you owe. For more information on the Offer in
Compromise program, go to IRS.gov/OIC.
Ways to check on the status of your refund.
Filing an amended return. Go to IRS.gov/1040X for information and updates.
• Go to IRS.gov/Refunds.
• Download the official IRS2Go app to your mobile de-
Checking the status of your amended return. Go to
IRS.gov/WMAR to track the status of Form 1040-X amended returns.
• Call the automated refund hotline at 800-829-1954.
It can take up to 3 weeks from the date you filed
your amended return for it to show up in our sysCAUTION tem, and processing it can take up to 16 weeks.
vice to check your refund status.
The IRS can’t issue refunds before mid-February
for returns that claimed the EITC or the additional
CAUTION child tax credit (ACTC). This applies to the entire
refund, not just the portion associated with these credits.
!
Making a tax payment. The IRS recommends paying
electronically whenever possible. Options to pay electronically are included in the list below. Payments of U.S. tax
must be remitted to the IRS in U.S. dollars. Digital assets
are not accepted. Go to IRS.gov/Payments for information
on how to make a payment using any of the following options.
• IRS Direct Pay: Pay taxes from your bank account. It’s
free and secure, and no sign-in is required. You can
change or cancel within 2 days of scheduled payment.
• Debit Card, Credit Card, or Digital Wallet: Choose an
approved payment processor to pay online or by
phone.
• Electronic Funds Withdrawal: Schedule a payment
when filing your federal taxes using tax return preparation software or through a tax professional.
• Electronic Federal Tax Payment System: This is the
best option for businesses. Enrollment is required.
34
!
Understanding an IRS notice or letter you’ve received. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.
IRS Document Upload Tool. You may be able to use
the Document Upload Tool to respond digitally to eligible
IRS notices and letters by securely uploading required
documents online through IRS.gov. For more information,
go to IRS.gov/DUT.
Schedule LEP. You can use Schedule LEP (Form 1040),
Request for Change in Language Preference, to state a
preference to receive notices, letters, or other written communications from the IRS in an alternative language. You
may not immediately receive written communications in
the requested language. The IRS’s commitment to LEP
taxpayers is part of a multi-year timeline that began providing translations in 2023. You will continue to receive
communications, including notices and letters, in English
until they are translated to your preferred language.
Contacting your local TAC. Keep in mind, many questions can be answered on IRS.gov without visiting a TAC.
Go to IRS.gov/LetUsHelp for the topics people ask about
Publication 554 (2025)
most. If you still need help, TACs provide tax help when a
tax issue can’t be handled online or by phone. All TACs
now provide service by appointment, so you’ll know in advance that you can get the service you need without long
wait times. Before you visit, go to IRS.gov/TAC to find the
nearest TAC and to check hours, available services, and
appointment options. Or, on the IRS2Go app, under the
Stay Connected tab, choose the Contact Us option and
click on “Local Offices.”
————————————————————————
Below is a message to you from the Taxpayer Advocate
Service, an independent organization established by Congress.
The Taxpayer Advocate Service (TAS)
Is Here To Help You
What Is the Taxpayer Advocate Service?
The Taxpayer Advocate Service (TAS) is an independent
organization within the Internal Revenue Service (IRS).
TAS helps taxpayers resolve problems with the IRS,
makes administrative and legislative recommendations to
prevent or correct the problems, and protects taxpayer
rights. We work to ensure that every taxpayer is treated
fairly and that you know and understand your rights under
the Taxpayer Bill of Rights. We are Your Voice at the IRS.
How Can TAS Help Me?
TAS can help you resolve problems that you haven’t been
able to resolve with the IRS on your own. Always try to resolve your problem with the IRS first, but if you can’t, then
come to TAS. Our services are free.
problem is causing financial difficulty, if you’ve tried
and been unable to resolve your issue with the IRS, or
if you believe an IRS system, process, or procedure
just isn’t working as it should.
• To get help any time with general tax topics, visit
www.TaxpayerAdvocate.IRS.gov. The site can help
you with common tax issues and situations, such as
what to do if you make a mistake on your return or if
you get a notice from the IRS.
• TAS works to resolve large-scale (systemic) problems
that affect many taxpayers. You can report systemic issues at www.IRS.gov/SAMS. (Be sure not to include
any personal identifiable information.)
How Do I Contact TAS?
TAS has offices in every state, the District of Columbia,
and Puerto Rico. To find your local advocate’s number:
• Go to www.TaxpayerAdvocate.IRS.gov/Contact-Us,
• Check your local directory, or
• Call TAS toll free at 877-777-4778.
What Are My Rights as a Taxpayer?
The Taxpayer Bill of Rights describes ten basic rights that
all taxpayers have when dealing with the IRS. Go to
www.TaxpayerAdvocate.IRS.gov/Taxpayer-Rights
for
more information about the rights, what they mean to you,
and how they apply to specific situations you may encounter with the IRS. TAS strives to protect taxpayer rights and
ensure the IRS is administering the tax law in a fair and
equitable way.
• TAS helps all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. You may be eligible for TAS help if your IRS
Publication 554 (2025)
35
Index
A
To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
Accelerated death benefits 15
Accounting periods:
Change in, standard deduction not
allowed 19
Accrued leave payment:
Disability retirement and 14
Adjusted gross income (AGI) 18
Adjustments to income 18
Age:
Elderly or disabled credit,
requirements for 26
Standard deduction for age 65 or
older 19
American Association of Retired
Persons (AARP) 2
Annuities 6
Assistance (See Tax help)
Deductions:
Enhanced senior 24
Generally 19
Insurance premiums 23
Itemized 20
Meals and lodging 23
Medical and dental 21
Standard 19
Dependents 5
Standard deduction for 20
Disability 27
Credit for, permanently and totally
disabled 25
Income 14, 28
Definition and exceptions, for
elderly and disabled credit 27
Exclusions from, generally 18
Inclusions in, generally 18
Sale of home, for persons with
(See (See Sale of home))
Distributions, retirement plan 5
Drugs (See Medicines)
Dual-status taxpayers:
Standard deduction 19
G
Gain on sale of home (See Sale of
home)
General rule, pension or annuity 6
Gifts 17
H
Home care (See Nursing services)
Home improvements 21
Home, sale of (See Sale of home)
Hospital services 22
Household help 22
I
Income:
Adjustments 18
Disability payments, reporting
for 13
Earned income, defined 28
B
Gross, defined 4
Base amount, social security
Nontaxable, generally 5
benefits 11
Sale of home 16
Benefits:
Self-employment 4
Accident or health 14
Taxable, generally 5
E
Long-term care 14
Individual retirement arrangement
No-fault insurance 14
Early distributions, tax 9
(IRA):
Sickness and injury 13
Earned income credit 28
Adjustments to income 18
Social security 11
Elderly:
Contributions 19
Veterans’ 18
Credit for, persons who are 25
Deductible contribution 19
Bequests 17
Employment tax withholding 2
Distributions 6
Blind persons:
Employment taxes 24
Inheritances 17
Standard deduction for 20
Endowment proceeds 15
Injury benefits 13
Enhanced deduction for seniors 24 Insurance:
C
Estimated tax 12, 30
Accident and health 14, 23
Child and dependent care credit 28 Excess accumulation, tax on 9
Benefits, long-term care 14
Children:
Exclusion, gain on sale of home:
Benefits, no-fault insurance 14
Standard deduction for 20
Expatriate tax, effect of 16
Life insurance proceeds 15
Chronically ill persons 22
Proceeds paid after death 15
F
Chronically ill, defined 15
Proceeds paid before death 15
Compensation:
Federal Employees:
Insurance premiums for retired
Compensatory damages 14
public safety officers 10
Compensation Act (FECA)
For services 5
payments 14
Itemize
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