The U.S. tax year runs from January 1 to December 31

For most people and businesses, the tax year is the calendar year: January 1 through December 31. This is the period the IRS uses to measure your income, deductions, and tax liability. You report all income earned and expenses paid during those twelve months on your tax return, which you file the following spring.

The calendar year is the default, but it is not the only option. Certain businesses and self-employed people can choose a different twelve-month period, called a fiscal year. Understanding which year applies to you matters because it determines when you must file, what income counts toward this year's taxes, and when you can claim deductions.

Key Takeaways

  • The calendar tax year runs January 1 to December 31 and applies to most individual taxpayers automatically.
  • A fiscal year is any other twelve-month period and requires IRS approval; some businesses use it to match their actual operating cycle.
  • Income is taxed in the year you receive it (or are may have access to to it), not the year you spend it, which is why the tax year boundary matters.
  • If you are self-employed or own a business, you may be able to choose a fiscal year, but you must file Form 1128 with the IRS to change it.
  • Tax returns for the calendar year are due April 15 of the following year, though the important date can shift if April 15 falls on a weekend or holiday.

Why the tax year matters for your income

The tax year determines which dollars belong to which return. If you earn $5,000 in December and receive the payment in January, that income belongs to the January tax year, not the December one. This is called the cash basis of accounting — income counts when you actually receive it (or have a right to it), not when you earn it.

This distinction affects your tax bill directly. If you are expecting a large bonus or payment, timing its receipt before or after December 31 can shift it to a different tax year. For self-employed people and business owners, this is one reason a fiscal year can be useful: it lets you align your tax year with your actual business cycle instead of the calendar.

Deductions work the same way. A business expense counts in the year you pay it, not the year you incur it. If you pay an invoice on December 30, it belongs to this year's taxes. If you pay it on January 2, it belongs to next year's.

Who can use a fiscal year instead of the calendar year

Most individual taxpayers must use the calendar year. If you file Form 1040 (the standard individual income tax return), you have no choice — your tax year is January 1 to December 31.

Businesses and self-employed people have more flexibility. A sole proprietor, partnership, S corporation, or C corporation can request a fiscal year if there is a business reason for it. For example, a retail business might choose a fiscal year ending January 31, after the holiday season closes out. A school-based business might end its year in June, after the academic year finishes.

To change from the calendar year to a fiscal year, you must file Form 1128 (process for Change in Accounting Period) with the IRS. The IRS does not always approve every request — it looks for a genuine business purpose, not just tax convenience. Once approved, you stick with that fiscal year unless you request another change.

How the tax year affects filing important date

For the calendar year, your tax return is due April 15 of the following year. If you file a calendar-year return for 2024, it is due April 15, 2025. If April 15 falls on a Saturday or Sunday, or on a federal holiday, the important date moves to the next business day.

If you use a fiscal year, your return is due on the 15th day of the fourth month after your fiscal year ends. A business with a fiscal year ending June 30 would file by October 15. A fiscal year ending September 30 would file by January 15.

These are the standard important date. You can request an extension by filing Form 4868 (for individuals) or Form 7004 (for businesses), which gives you six additional months. An extension delays your filing important date but does not delay your payment important date — taxes owed are still due on the original date, or you will owe interest and penalties.

How estimated taxes align with the tax year

If you are self-employed or have income not subject to withholding, you must pay estimated taxes throughout the year. These are quarterly payments made on a schedule that follows the tax year.

For the calendar year, estimated tax payments are due April 15, June 15, September 15, and January 15 of the following year. Each payment covers roughly one quarter of your expected annual tax bill. If you use a fiscal year, the payment dates shift to match your fiscal year quarters.

The tax year matters here because you are estimating your income for the full twelve-month period and dividing it into four chunks. If your fiscal year ends June 30, your first estimated payment (covering July through September) is due September 15, and so on through the following June.

Tax year boundaries and retirement account contributions

The tax year also determines the important date for certain tax-advantaged contributions. You can contribute to a traditional IRA or Roth IRA for a given tax year until the filing important date of that year — April 15 for the calendar year. A contribution made on April 10, 2025 can be designated for the 2024 tax year if you specify it.

Employer-sponsored plans like 401(k)s have different rules. Contributions must be withheld from your paycheck during the calendar year itself; you cannot make them after December 31 and explore them to that year's taxes. The important date to contribute to an HSA (Health Savings Account) for a given year is also the tax filing important date, giving you a small window after the year ends.

Understanding your tax year matters when you are trying to maximize retirement savings or catch up on contributions. If you are self-employed and use a fiscal year, the contribution important date still follow the calendar year for IRAs, which can create a mismatch worth planning around.

Frequently Asked Questions

Can I change my tax year from calendar to fiscal?

Yes, but only if you are self-employed or own a business. You must file Form 1128 with the IRS and show a genuine business reason — not just tax savings. The IRS reviews the request and either approves or denies it. Once approved, you are locked into that fiscal year unless you request another change later.

If I receive income in January, does it count toward last year's taxes?

No. Income counts in the tax year you receive it, not the year you earned it. Money received in January 2025 belongs to the 2025 tax year, even if you did the work in December 2024. This is why timing of payments can matter for tax planning.

What if my business closes mid-year?

Your final tax year runs from the start of your tax year through the date you close. If you close on June 15 and normally use the calendar year, your final return covers January 1 through June 15. You file this short-year return by the normal important date for that year (April 15 of the following year, or the important date for a fiscal year if you use one).

Do all states use the same tax year as the federal government?

Most do, but not all. Most states follow the federal calendar year for income tax purposes. However, some states have different rules for certain business types or allow fiscal years under different conditions. Check your state's tax authority website to confirm the rules for your situation.

Why does the tax year matter if I file late anyway?

The tax year determines which income and deductions belong on which return, regardless of when you file. Filing late does not move income from one year to another — it just means you owe penalties and interest. The year the income occurred is fixed by when you received it, not by when you report it.