If you’re facing taxes and don’t seem to be able to pay them in full right away, the IRS payment plans may be your suitable solution. 

The government, through the IRS, offers options to help taxpayers who owe the federal government settle their debts and prevent further tax problems.

Continue reading to learn more about what IRS payment plans are, how to apply for them, and how they can help you manage your tax debts.

What Is an IRS Payment Plan?

IRS payment plans, also known as IRS installment agreements, are tax-settlement options that allow taxpayers to pay tax debts in installments rather than all at once. 

These IRS payment plans are designed to ease the financial burden for those having a hard time paying off their debts right away, helping them manage their tax debts more efficiently. 

Another advantage of installment agreements is that they prevent aggressive tax enforcement actions (levies, liens, wage garnishments), provided the taxpayers remain compliant with the agreement. 

Who Qualifies?

Anyone who owes federal taxes and cannot pay in full may apply for an IRS installment agreement. However, approval of which agreement depends on the amount owed, filing status, and ability to pay. 

On the other hand, those with a history of repeated default on prior IRS payment plans, unfiled tax returns, and a significant outstanding balance (typically over $50,000) may be denied or require extensive documentation. 

 

Types of IRS Payment Plans

Short-Term Payment Plan

The first type of IRS payment plans is a short-term plan. This payment plan requires the taxpayer to pay the full amount (including penalties and interest) within 180 days. Failing to do so will force you to change to a long-term payment plan or face severe consequences. 

While those with any amount of debt can apply for a short-term payment plan, due to the nature of the deadline, it’s suitable for taxpayers with smaller debts or temporary cash flow issues,  who need a little extra time beyond the original due date. 

Eligibility includes not being in an open bankruptcy status and having filed all required tax returns. Payments are flexible with no required fixed monthly amount. However, it’s recommended to make partial payments to reduce the interest that accrues. 

 

Long-Term Payment Plan (Installment Agreement)

A long-term payment plan, often called an Installment Agreement (IA), is an IRS payment plan available to those who owe less than $50,000 and cannot pay in full within 180 days. 

Requirements include having filed all current and the last five years’ tax returns, not in a bankruptcy proceeding, and having no recent default on an IRS payment plan. 

Taxpayers who have over $50,000 in debt can still apply for an IA. However, stricter requirements, such as providing detailed financial statements and undergoing an IRS review, apply. 

The installment agreement term length is whichever comes first — up to 72 months or until the collection statute expires. Payment is made in fixed monthly installments, with the minimum payment equal to the total amount owed divided by 72 months. 

An installment agreement is suitable for those who need ample time to pay off debts and who need to pause any further actions by the authority, such as collection actions. 

Subtypes:

The Individual Installment Agreement and the Business Installment Agreement are other subtypes of IRS installment agreements available. 

An individual installment agreement is specifically for personal tax debt (e.g., Form 1040 liabilities) and is the default for most wage earners or self-employed individuals. Single, jointly filers, and sole proprietors owing income tax can apply for an individual installment agreement. 

A business installment agreement is tailored for businesses owing entity-level debts, like payroll or corporate taxes, to help keep operations running. Sole proprietors, partnerships, LLCs, or corporations with tax liabilities (besides personal debts) are recommended to apply for a business installment agreement. 

Other requirements include less than $25,000 in outstanding debt, all business returns filed, and no open bankruptcy.

 

Partial Payment Installment Agreement (PPIA)

A partial payment installment agreement is a more advanced agreement reserved for those owing larger debts or experiencing financial hardship, where standard installment agreements aren’t feasible. 

PPIA is also designed for those who aren’t able to fulfill their tax settlements within the IRS’s 10-year Collection Statute Expiration Date (CSED)—the period during which the IRS can collect the debt. 

PPIA allows taxpayers to make partial payments based on what they can afford monthly. Eligibility for this type of plan requires full financial disclosure, detailed IRS analysis, and approval. There’s also a chance the IRS will forgive the remaining balance if it expires before full repayment is made.

 

How to Apply for an IRS Installment Agreement

There are several ways to apply for an IRS payment plan: online, by mail, by phone, or with legal representation. 

For speed and lower fees, apply online. Applying by phone or mail takes 30-60 days. The best option to take is to seek legal representation to ensure accuracy and efficiency, especially if you’re unsure or dealing with significant tax or financial issues. 

Whichever option you choose, you’ll need to provide information such as the amount owed, the tax year(s) involved, monthly income and expenses, assets, liabilities, etc. 

 

Fees and Interest Associated with IRS Payment Plans

Setup Fees

Type of Payment Plan	Setup Fee (approx.)
Online Direct Debit	$31
Online Non-Debit Payment	$130
By Phone/Mail	$107 – $225
Low-Income Waiver	Reduced or waived

Ongoing Costs

While IRS installment agreements are a good option to help you manage your tax debts, note that there are ongoing costs that come with them. Firstly, there is daily interest on the unpaid balance, which, over time, can increase the final bill more than the original debt. Any late payment will also incur penalties that can add up significantly. Penalties are typically 0.5% of the unpaid taxes per month. 

 

What Happens If You Miss an IRS Payment?

Missing a payment will not automatically end your plan. However, missing too many payments can result in a default, which will terminate your plan and resume any collection actions that were halted under the agreement. 

The best way to prevent termination of the agreement and further issues is to ensure payments are made on time; if you miss a payment, act quickly to make it up.

 

How Greenberg Law Can Help with IRS Installment Agreements

Greenberg Law Group is an expert in tax matters, including tax debts and IRS installment agreements.

We’ll help guide you through every corner of navigating your tax issues and ensure that every detail isn’t missed and that the outcomes are the best you can achieve. 

For more details, please contact us today. We look forward to assisting you with your tax matters, whether it’s a basic or more complex issue; we’re up for it! 

 

 

FAQs About IRS Payment Plans

How long can an IRS payment plan last?

Most long-term installment agreements can span up to 72 months (6 years), depending on the amount owed.

Will an IRS payment plan hurt my credit?

The IRS does not report to credit bureaus, so your credit score isn’t directly impacted. However, tax liens (if filed) can appear on public records.

Can I negotiate the monthly payment amount?

Yes, primarily if your financial situation supports a lower amount — but documentation is required.

The amount you pay in federal income tax depends on how your taxable income is divided across the various tax brackets.

And because the IRS adjusts the income thresholds for tax brackets for inflation each year, staying up to date on the current tax brackets is critical to avoiding mistakes and tax issues. 

Read on to learn more about the 2026 tax bracket changes as announced by the IRS.  

 

Why Tax Brackets Matter

What Is a Tax Bracket?

Tax brackets are classifications of tax rates that taxpayers must pay based on their income levels. These rates are organized into brackets, or layers, making it easy for taxpayers to find their income tax bracket. 

 

How Brackets Affect You

The U.S. uses a progressive tax system, meaning that as your income rises, your tax rate increases. 

However, only income falling within each bracket is taxed at that bracket’s rate. This implies you won’t have to pay the highest tax rate on all your income, and only a portion of it is subject to that rate. 

 

2026 Federal Income Tax Brackets

Single Filers

Tax Rate	Income Range (Single)
10%	$0 – $12,400
12%	$12,401 – $50,400
22%	$50,401 – $105,700
24%	$105,701 – $201,775
32%	$201,776 – $256,225
35%	$256,226 – $640,600
37%	Above $640,600

 

Married Filing Jointly

Tax Rate	Income Range (MFJ)
10%	$0 – $24,800
12%	$24,801 – $100,800
22%	$100,801 – $211,400
24%	$211,401 – $403,550
32%	$403,551 – $512,450
35%	$512,451 – $768,700
37%	Above $768,700

 

Heads of Household

Tax Rate	Income Range (HOH)
10%	$0 – $17,700
12%	$17,701 – $67,450
22%	$67,451 – $105,700
24%	$105,701 – $201,750
32%	$201,751 – $256,200
35%	$256,201 – $640,600
37%	Above $640,600

 

Standard Deduction Amounts for 2026

Updated Deduction Thresholds

Filing Status	2026 Standard Deduction
Single	$16,100 (est.)
Married Filing Jointly	$32,200 (est.)
Head of Household	$24,150 (est.)

 

Key Factors That Influence Your Tax Bracket

Income Type

When determining how much you need to pay in taxes, the first factor to consider is your income type. 

Ordinary income, such as salaries, bonuses, and short-term capital gains, is taxed at the regular tax brackets (10%-37%). 

Other income streams, such as long-term capital gains and qualifying dividends, have their own tax bands (0% to 20%), whereas Roth IRA/401(k) distributions are tax-free. 

 

Filing Status

The next factor that can affect your tax is your filing status. The exact dollar amount can put you in a completely different marginal tax bracket depending on how you file.

For example, a single filer at $60,000 taxable income puts you in the 22% bracket, whereas married filers are in the 12% bracket. If you get married or have a child, your tax bracket can change even though your paycheck stays the same.  

 

Deductions & Credits

Your bracket is based on your taxable income, not salary or total earnings. Deductions and credits are two crucial factors that can lower your taxable income. 

Standard deductions, itemized deductions, and tax credits, like the Child Tax Credit, are all tax advantages that can effectively retain more money in lower brackets.

 

How to Estimate Your 2026 Tax Liability

Calculating your tax liability can be done in several simple steps, using the 2026 tax brackets as the primary tool and reference. 

Start by adding up everything you expect to earn during the year—your salary, bonuses, interest, dividends, side-gig money, rental income, etc. 

Next, subtract the “above-the-line” adjustments you’re entitled to, such as contributions to a traditional 401(k) or IRA, student-loan interest you pay, or money you put into a health savings account; what’s left after those subtractions is your adjusted gross income, or AGI.

From your AGI, take one more big deduction. Most people simply use the standard deduction, but if you have a lot of mortgage interest, charitable donations, or medical expenses, you can itemize and subtract even more. 

Whatever number remains after this deduction is your taxable income.

Now, go back to the 2026 tax brackets and find your filing status and apply the rates only to the portion of taxable income that falls in each bracket.

 Add up the tax on each “slice” of income. This is your gross federal income tax liability before credits. Subtract any tax credits, and you have two results: 

 

Marginal tax rate: The rate you pay on your next dollar of income (your top bracket).

Effective tax rate: the total tax you actually pay divided by your gross income. The effective rate is almost always much lower than the marginal rate.

Example: You are a single filer, making $90,000. Assume you take the standard deduction and have no other adjustments or credits.

 

Gross income: $90,000

Standard deduction: −$16,100

Taxable income: $73,900

Now apply the brackets layer by layer:

 

Bracket	Income in the bracket	Rate	Tax on the portion
10%	First $12,400	10%	$1,240
12%	Next $38,000	12%	$4,560
22%	Remaining $23,500	22%	$5,170
Total Federal Tax			$10,970

 

Marginal rate: 22% (your next dollar earned would be taxed at 22%)

Effective rate: $10,970 ÷ $90,000 ≈ 12.2% (what you actually pay overall on gross income)

If you’re unsure of where you stand or how to calculate your tax liability effectively, contact our team today. 

 

FAQs: 2026 Federal Tax Brackets

What are the highest tax brackets for 2026?

The highest federal tax bracket is 37%, applying to income above $609,351 (single filers) or $731,201 (joint filers).

Are tax brackets changing in 2026?

The structure remains the same (seven brackets), but the income ranges are adjusted for inflation.

What’s the difference between marginal and effective tax rate?

Your marginal rate is the highest tax bracket you fall into. Your effective rate is the average rate you pay across all income levels.

Besides its pleasant climate and diverse culture, Florida’s tax advantages and incentives for residents are among the most compelling reasons people choose to live in the state. 

Are you also considering relocating to Florida? If so, read on to know about Florida taxes and their implications, so that you know what to expect before you pack your bags and move.

 

Why Are So Many People Moving to Florida?

People move to Florida for several appealing reasons. First is the climate, averaging a high of 83.3°F and a low of 62°F, making it relatively comfortable year-round and popular among retirees. 

Second is the no-income tax policy. Florida is one of the seven states in the country that doesn’t apply income tax. 

And thirdly, the business-friendly environment created by favorable tax policies, including no income tax and a flat corporate tax rate of 5.5%, as well as pro-business regulations that encourage development. 

According to the Census Bureau, Florida ranks second, just behind Texas, with 467,347 people moving into the state from 2023 to 2024. 

 

Florida State Taxes 101

No Personal Income Tax

Under Article VII, Section 5 of the Florida Constitution, the state doesn’t impose a personal income tax. This includes income from wages, salaries, and commissions, as well as retirement income, such as Social Security, 401(k) distributions, pensions, and investment income, including dividends, interest, and capital gains. 

As for businesses in Florida, the state doesn’t have personal tax on pass-through entities (LLCs, S-Corps, Partnerships). However, corporations (C-Corporations) are subject to a 5.5% rate. 

 

Sales and Use Tax

The current Florida sales and use tax rate is 6%. Taxable items include tangible personal property, such as furniture, vehicles, and electronics; admission tickets; commercial leases; and hotel/transient rentals (if the stay is less than six months, Florida adds a 6% plus local lodging tax). 

Use Tax applies to out-of-state purchases (such as online purchases) from sellers who do not charge Florida sales tax. In this case, a self-report is required through Form DR-15. 

 

Property Taxes in Florida

Florida doesn’t apply a state-wide property tax. The taxes are levied at the local level (i.e., counties, cities, and districts); therefore, the rate varies. However, the effective average property tax rate in Florida is around 0.80%, which is lower than the national average. 

 

Other Taxes to Be Aware Of 

The state doesn’t levy income, inheritance, or estate taxes, making it an appealing place to live for many, including retirees and high earners. 

However, Florida does tax its residents on gas (39.9 cents/gallon), the Communication Services Tax (CST) on the sale of communication services at 7.44%, and an insurance premium tax (1.75%) on most types of insurance, including life, health, and property.

 

Establishing Residency in Florida for Tax Purposes

When you officially move to Florida and establish your residency, the new tax rule will apply.  Until then, your old state might still tax you until you prove your residency. 

Establishing your residency in Florida helps you cut ties with your prior state, enabling you to begin planning for Florida tax rules. 

To start becoming a taxpayer of Florida, you need to prove that you are a resident of Florida by obtaining some of the requirements that revolve around your intent to make Florida your home and objective evidence, which include establishing a domicile in Florida. 

 

Steps to establish domicile in Florida:

To establish and maintain a domicile in Florida, one must fulfill several requirements, including but not limited to: 

• Getting a Florida driver’s license and register to vote in Florida
• Filing a declaration of Domicile at a local Clerk of the Circuit Court’s office or online
• Updating legal documents, including residential lease agreements, and use the Florida address on all legal paperwork, including tax returns.  

 

Common Florida Tax Implications After Relocating

Selling a Home in Another State

Florida doesn’t have a capital gains tax. However, your previous state might still tax the gain if you’re still a resident of that state at the time of sale. States like CA (up to 13.3%) or NY (up to 10.9%) tax gains sourced in-state, or if you’re deemed a resident. 

Timing the move and selling your home before establishing Florida residency may help you potentially qualify for the full federal exclusion. Selling immediately after you move could trigger a residency audit, especially if you retain ties, such as family or business, in your old state.

 

State Exit Taxes and Ongoing Liabilities

Your prior state, particularly those with high taxes, such as California and New York, may still try to tax you on everything from large sales to retirement distributions. 

Besides establishing Florida residency and domicile, you want to cut all ties with your previous state to get you out of the “statutory residency.” 

An individual can be deemed a resident if they maintain a “permanent place of abode,” such as a home, have bank accounts, and spend more than 183 days in the state annually. 

To minimize audit risks, track days meticulously, sell or rent out the old home (don’t keep it accessible), file a Florida Declaration of Domicile, and update your life in Florida (by taking steps to become a resident, as we have discussed earlier).

 

Florida Tax Benefits for Retirees and High Earners

Florida is especially appealing to retirees and high-income earners due to its tax-friendly environment. 

For example, the absence of state tax on all forms of retirement income means retirees can retain all their retirement funds, potentially saving significant amounts each year compared to states with income taxes. 

The absence of estate tax and inheritance tax also means high-net-worth individuals can protect their wealth transfers and pay nothing to the state on inherited assets,

 

When to Consult a Florida Tax Attorney

Florida is naturally an attractive place to relocate for many, including retirees, high-net-worth individuals, and entrepreneurs, thanks to its tax incentives and other perks that support wealth preservation and growth.

 However, relocating to a new place, such as Florida, entails new tax responsibilities that require meeting complex requirements to get the full benefits and avoid issues.  

Consult a Florida tax attorney to help you understand Florida tax implications and make the moving process as smooth as possible. 

 

If you haven’t begun your 2026 tax planning yet, it’s a great idea to start now. 

Tax planning allows you to save money and avoid unpleasant surprises when the filing season arrives. By being fully prepared and understanding your tax responsibilities, you can have all the tools to minimize losses and maximize the tax benefits that you’re eligible for. 

Below are our 2026 tax planning tips that can help you understand more about how crucial tax planning is to setting you up for financial success.

 

Why 2026 Tax Planning Starts Now

Dealing with taxes is not something you want to leave until the last minute.

Engaging in tax preparation early for the upcoming 2026 will help you avoid tax problems, as well as identify opportunities to save and grow your finances. 

 

1. Adjust Your Withholding and Estimated Payments

The first 2026 tax planning tip is to adjust withholding and estimated payments to prevent penalties and ensure you pay as you should. 

Start by reviewing your 2025 income projections and make adjustments according to life changes. For example, if you expect a raise at your job or have a child in 2026, these instances will have an impact on your tax liability. 

Use the IRS Tax Withholding Estimator to calculate the right withholding based on your income, deductions, and credits. 

Next, maximize cash flow and balance withholding so you’re not giving the IRS an interest-free loan that ties up your funds when they could be used for savings, investments, or expenses. 

Check your 2025 refund or balance due. If you received a large refund, you’re likely over-withholding. Adjust your W-4 to reduce withholdings and keep more money in your paycheck throughout 2026.

 

 

2. Maximize Retirement Contributions

2026 Contribution Limits

Part of your 2026 tax planning should include contributing to retirement accounts such as 401(k)s, Roth IRAs, and traditional IRAs. Contributions to these retirement accounts can reduce your taxable income and grow your fund tax-deferred or tax-free. 

For 401(k) plans, the total employee contribution limit for those under 50 will increase from $23,500 in 2025 to $24,500 in 2026, and the catch-up contribution limit will increase from $7,500 in 2025 to $8,000 in 2026. 

As for traditional and Roth IRAs, contribution limits will increase from $7,000 in 2025 to $7,500 in 2026. The catch-up contribution limit will rise from $1,000 in 2025 to $1,100 in 2026.

Tax-Deferred Growth and Deductions

The funds you contribute to a Traditional 401(k), 403(b), or deductible Traditional IRA are subtracted from your taxable income for the year. This means you pay less in taxes now, and the money grows tax-deferred until withdrawal in retirement. 

Now, how do you decide which accounts to contribute to: Roth or traditional contributions? While both accounts can help you save, they work differently on taxes. For example, contributions to traditional 401(k) s and IRAs are typically made with pre-tax dollars, while Roth IRAs provide tax-free growth and tax-free withdrawals. 

 

3. Plan for Capital Gains and Investment Income

Investments can create a big tax bill if you’re not careful, but with tax planning, you can control how much you owe, or even wipe out the tax entirely.

First, you want to harvest gains and/or tax-loss harvest before the year ends. Harvesting tax loss occurs when selling an investment at a loss to offset taxable gains. 

In other words, if you have investments that have lost value, you can sell them to cancel out those gains. IRS tax amount =  Gains – losses. So, for example, if you sold a stock and made $15,000 in gains, and sold another that’s down $13,000, you owe a tax of $2,000. 

 

4. Take Advantage of Tax Credits and Deductions

Common 2026 Tax Credits

Tax credits are one of the most effective tools for reducing your 2026 tax liability. Unlike deductions, which simply lower the amount of income subject to tax, credits reduce your tax bill dollar for dollar. 

Several tax credits, including the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC), and education credits, are refundable, meaning that if they exceed what you owe, the IRS will send you a refund for the difference.

 

Child Tax Credit: Helps families with children under 17 to get a tax break. To qualify, the child must have a social security number, have resided with you for more than half of the tax year, be claimed as a dependant on your return, and meet several other criteria. 

 

Earned Income Tax Credit: Allows low to moderate-income earners to get a refundable credit for their earned income from jobs and self-employment. In 2026, the maximum Earned Income Tax Credit (EITC) is $8,231 for qualifying taxpayers with three or more qualifying children. 

 

Education Credit: Covers the costs of college. The two types of education credits are: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). 

Lastly, don’t overlook itemized deductions such as medical expenses, charitable contributions, and mortgage interest. Track and evaluate all records, and if the total qualifying expenses exceed the standard amount, itemize to save more. 

Conversely, if your itemized expenses are low (e.g., no big medical bills or donations), take the standard deduction; it’s simpler and often bigger. 

 

5. Meet with a Tax Attorney Early

If you have any doubt or confusion about how to go about 2026 tax planning, meet with a tax attorney with the right expertise who can help you not just plan, but deal with complex matters like audits, business structures, estate planning, and other IRS issues, to ensure you’re tax obligations are done right. 

Remember that working on taxes requires due diligence, accuracy, and effective communication to produce the result you want, which is conducive to your financial success. 

In contrast, any errors or discrepancies on your tax report will result in tax issues and dealing with the IRS. 

 

Final Thoughts on 2026 Tax Planning

Being successful in dealing with taxes requires planning and strategic execution. With early tax planning, you give yourself more time to look at your finances and tax obligations.

If you require assistance with tax planning or other tax-related matters, please do not hesitate to contact Greenberg Law Group. 

 

2026 Tax Planning Questions

What is the most important part of 2026 tax planning?

The goal of tax planning is to get everything in order ahead of time for what’s to come. Starting your tax planning early allows you to prepare and avoid surprises, which can cause stress and more complex problems.

When should I start planning my 2026 taxes?

You should start planning your 2026 taxes as soon as possible, certainly before the end of 2025. The earlier you begin, the more time you will have to complete all of your taxes and be ready to face the new year with ease and confidence.

With the end of the year fast approaching, now is the time to take action and resolve all your tax matters. Below, we have listed our year-end tax tips for 2025 to help you take advantage of all available opportunities while being compliant and avoiding tax problems. 

 

Review Your Income, Deductions, and Withholdings

Double Check Your W-2s, 1099s, and Income Sources

To avoid issues with the IRS, ensure you have all the necessary forms and information readily available. Forms like W-2s and 1099s are used to report your income sources, such as wages, freelance earnings, dividends, or other taxable income. 

Double-checking for details is one of our crucial tax tips for 2025. Besides confirming accurate personal information, such as name and Social Security number, check for other discrepancies. If any are discovered, contact your employer and resolve the issue as soon as possible.

Adjust Withholdings If Needed

Improper tax withholding can result in overpaying or underpaying taxes, potentially triggering tax audits or other tax issues. Review your withholdings, especially after major life changes such as marriage, the birth of a child, or a job change, as these can significantly impact your tax status and liability. 

Moreover, if you owe a large tax bill or received a substantial refund last year, adjusting your withholdings can help better align your payments with your tax obligation. 

Make use of the IRS Tax Withholding Estimator or consult a tax professional to fine-tune your W-4 forms for optimal results.

 

Maximize Retirement Contributions Before the Deadline

401(k) & Traditional IRA Contributions

Maximizing retirement contributions, such as those to 401(k) and IRA accounts, is a year-end tax tip that can help reduce your overall taxable income and boost your savings. 

Moreover, these retirement accounts have tax-deductible benefits. It’s essential to note, however, that there are certain eligibility restrictions and limitations, so please ensure you understand them. For example, individuals under the age of 50 can contribute $23,500 to both traditional and Roth 401(k) plans in 2025. 

 

Consider Roth Conversions Strategically

Unlike a traditional IRA, a Roth IRA allows you to withdraw tax-free in retirement. However, note that converting from a traditional to a Roth IRA, which involves transferring funds from a traditional account to a Roth, will result in taxable income in the year of conversion.

Lastly, take into account your overall tax brackets and consider future income predictions. This can help you determine the impact of your conversion. 

 

Don’t Miss Out on Tax-Advantaged Savings Accounts

Health Savings Accounts (HSA)

Having an HSA, or Health Savings Account, helps cover medical expenses while also growing your investments and taking advantage of tax breaks—an ideal combination for a retirement plan. 

HSA contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical purposes are also tax-exempt. Like most savings accounts, there are specific requirements that must be met. 

For example, applicants must be registered in a high-deductible health plan that meets the IRS’s deductible and out-of-pocket maximum requirements, and the status cannot be claimed as a dependent on someone else’s tax return, such as your parents. 

 

Flexible Spending Accounts (FSA)

FSAs are tax-advantaged retirement accounts, usually offered by employers, that allow you to set aside some funds from your paycheck to spend on eligible expenses. These FSA contributions are tax-free. 

Eligible expenses include healthcare costs, such as medical bills, as well as dependent care FSA expenses, such as childcare, preschool, or eldercare. Putting money into an FSA ensures that you have cash available in the event of an emergency, all of which is tax-free. 

 

Review and Harvest Capital Gains & Losses

Review and manage capital gains and losses from your investments to minimize your tax bill.

Review your portfolio and sell any investments that have lost value before the end of the year to offset gains and reduce your taxable income. Keep an eye out for trading fees and ensure your sales align with your long-term investment objectives. 

Make Strategic Charitable Donations

Donating to charity causes is one approach to save money on taxes while also helping important causes. Donations to eligible charities, such as 501(c)(3) organizations, can be deducted up to 60% of the taxpayer’s adjusted gross income (AGI) if itemized. 

Another strategy for donating while saving on taxes is to donate an investment that has increased in value. For example, if you have a $3,500 stock that you have held for a year and its value has increased to $7,000, donating it allows you to deduct the entire $7,000 without paying taxes on the $3,500 gain.

When making donations, ensure they are made by the December 31, 2025, deadline, and maintain accurate records of all documents. Also, ensure that the charities you want to donate to meet the IRS’s qualifications.

Final Thoughts: A Smart Finish for a Strong Start

Getting all your tax matters sorted out before the new year is the recipe for avoiding tax issues and starting the new year off strong. 

As you can see, there are numerous ways for you to save on taxes and critical expenses while increasing your savings and lowering your taxable income. All the choices presented here are viable, but they may not be suitable for everyone due to varying needs and goals. 

Therefore, the key is to choose the right options by considering your specific situation. Consult a tax professional to assist you in sorting out your taxes and devising the best approach for avoiding tax difficulties and maximizing your rewards.

Greenberg Law specializes in all aspects of tax law. We have a team ready to help you every step of the way!

A tax holiday provides a temporary reduction or elimination of specific taxes, providing significant opportunities for both businesses and consumers. Understanding tax holidays thoroughly can help you navigate these opportunities, maximize the benefits they offer, and ensure compliance. Continue reading to learn more.

 

What is a Tax Holiday?

A tax holiday is a temporary time during which the government reduces or removes specific taxes to relieve taxpayers’ burdens and stimulate economic activity, such as consumer spending, company investment, and job creation. 

A tax holiday is usually only for a few days or months. For example, the government may declare a tax holiday on weekends or during specific time periods, such as before the start of the school year or before storm season.

 

How Do Sales Tax Holidays Work?

A sales tax holiday aims to reduce costs for consumers, increase sales for retailers, and boost local economies overall. For example, a sales tax holiday is frequently used in many states for back-to-school shopping and disaster preparedness.

These tax breaks frequently apply to specific products under certain conditions. For example, a sales waiver applies to school supplies such as notebooks, calculators, backpacks, apparel, and footwear with a price limit. 

Batteries, generators, and flashlights are all examples of disaster preparedness items. 

 

Some states additionally provide a sales tax break for energy-efficient appliances such as Energy Star-rated air conditioners and refrigerators. The sales tax holiday may apply to both in-store and online purchases, subject to certain criteria, such as payment within the holiday period.

 

Retailer Responsibilities During a Tax Holiday

During a tax holiday, retailers are responsible for following the right implementation according to state-specific guidelines and ensuring accurate records to maintain compliance. 

Retailers must adjust their tax-collecting procedures, such as upgrading the system, to ensure that qualifying items are excluded during the tax holiday and that online platforms display exemptions for eligible products.

To comply with state guidelines, follow the specific regulations for qualifying items, price limitations, and holiday duration. Maintain thorough records of tax-exempt transactions and file accurate sales tax returns by separating taxable and exempt sales over the holiday season.

 

Examples of Tax Holidays in Florida

Florida’s Back-to-School Sales Tax Holiday

Florida has an annual back-to-school sales tax holiday that runs from August 1 to August 31. During this sales tax holiday, qualified items include: 

• Clothing, footwear, wallets, bags, handbags, backpacks, fanny packs, and diaper bags priced at $100 or less per item.  

• Specific school supplies priced at $50 or less per item. 
• Learning aids and jigsaw puzzles with a sales price of $30 or less.  
• Personal computers and computer-related accessories priced at $1,500 or less, purchased for noncommercial home or personal use. 

Disaster Preparedness Sales Tax Holiday

Florida’s disaster preparedness sales tax holiday, effective August 1, 2025, is a permanent, year-round sales tax holiday on selected supplies. Qualifying items such as batteries, generators, fire extinguishers, smoke detectors, and others are tax-free at any time of the year.   

 

Tool Time Sales Tax Holiday

Unlike previous years, Florida’s 2025 tax relief package does not include a tool time sales tax holiday, which is typically a tax-free purchase of equipment commonly used by skilled workers, such as power tools and work boots. 

However, the state has included other sales tax holidays, such as the fishing, hunting, and camping sales tax holiday, which runs from September 8 to December 31, as well as a sales tax exemption for admissions and gold, silver, or platinum.

Energy-Efficient Appliances or Gas Tax Holidays

Energy-efficient appliances that support sustainability, such as Energy Star-rated washers, dishwashers, and refrigerators, are tax-exempt. 

However, Florida currently does not offer an energy-efficient tax and gas exemption; instead, the state has transitioned to a permanent disaster preparedness exemption, with some qualified products overlapping with energy-efficient products.

Are Tax Holidays Effective?

Pros of Sales Tax Holidays

Sales tax holidays help boost local economies, benefiting both consumers and businesses. Sales tax holidays provide immediate relief to customers by lowering the prices of highly sought-after essentials, such as those for back-to-school qualified items, resulting in savings and a temporary ease in expenses for families, particularly those low-income families.

Moreover, sales tax holidays help strengthen local economies, benefiting both consumers and shops. 

The disaster preparedness sales tax also encourages the community to stock up on crucial supplies, such as generators and batteries, ahead of extreme weather events like hurricane season, which improves public safety. 

Cons of Sales Tax Holidays

As beneficial as it seems, the sales tax holiday also has its drawbacks. 

For starters, it can create potential confusion in its rules, such as price caps and item definitions, resulting in misunderstandings between consumers and retailers and potentially causing compliance issues. 

Second, studies have found that, while tax breaks increase spending, they change the timing of purchases rather than creating additional demand. For example, consumers may postpone purchases until the tax-free period, impeding long-term economic growth. 

Lastly, temporary revenue dips as a result of tax exemptions can make it difficult for state and municipal governments to estimate accurately, complicating budgeting and adding additional uncertainty. 

 

Legal Implications of Tax Holidays

During the period of tax holidays, it’s crucial for businesses to stay in compliance with the current regulations to prevent penalties and other tax issues, such as back taxes and audits.

In Florida, the sales tax holidays are governed by Chapter 212 of the Florida Statutes and administered by the Department of Revenue, which requires businesses to ensure proper application of exemptions.

This includes properly identifying qualifying items, correctly advertising tax holidays to consumers, and accurately reporting sales tax returns. Non-compliance with the rules may result in civil and criminal penalties, depending on the severity of the violations, such as those between negligence and willful intent. 

Final Thoughts from Greenberg Law

Tax holidays are no doubt helpful for both consumers and retailers. Consumers can buy essentials at a lower cost, allowing them to save more, while retailers benefit from increased sales during this temporary period. 

Although these exemptions provide temporary assistance, they are not a replacement for a comprehensive tax plan. Tax holidays are temporary, limited in scope, and don’t offer long-term financial benefits for managing taxes year-round. 

For more about tax planning, guidance, or resolution, reach out to Greenberg Law Group. Our expertise can simplify your tax journey and help you achieve optimal results.