The April 15 deadline to file 2025 income taxes is fast approaching, and taxpayers are navigating new federal tax changes alongside a District of Columbia dispute that affects how local returns are calculated.
The IRS said taxpayers must file their federal returns and pay any taxes owed by April 15. Those needing more time can request a six-month extension, but any unpaid taxes after the deadline can result in penalties, interest, and additional fees tied to underpayment or inaccurate filings.
Changes under the federal law known as the One Big Beautiful Bill are already affecting returns this year. The law raises the standard deduction to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly. It also increases the state and local tax deduction cap to $40,000 for joint filers and $20,000 for married individuals filing separately. The law includes adjustments to how tips and overtime are taxed and expands tax credits and deductions for children and seniors.
District Mayor Muriel Bowser (D) and administration officials are urging D.C. residents to file on time and take advantage of credits and free tax preparation services available throughout the city.
“With refunds going paperless this year, having a safe and affordable bank account is more important than ever,” said Karima Woods, commissioner of the D.C. Department of Insurance, Securities and Banking. “Through our Bank on DC Program, we connect residents to trusted financial institutions that offer low-cost accounts and services.”
In a letter to city leaders, Glen Lee, chief financial officer for the District of Columbia, said the current tax filing season will proceed without interruption and that residents will not need to refile returns, addressing concerns raised earlier this year.
Those concerns center on the District’s decision to decouple from parts of the federal tax law to avoid a projected loss of hundreds of millions in local revenue. The D.C. Council chose to continue taxing certain income, including tips and overtime wages, at the local level even though those categories receive tax relief under federal law.
Congress later voted to overturn the District’s approach, creating uncertainty about whether local tax rules would change during the filing season. D.C. Attorney General Brian Schwalb determined that Congress acted too late to block the District’s law for this year, allowing filings to move forward under existing local rules.
For taxpayers, that means federal and District returns may differ. Income that may receive favorable treatment on a federal return could still be taxed locally. At the same time, the District expanded its own benefits, including increasing its match of the Earned Income Tax Credit to 100% of the federal credit, up from 70% in prior years.
District officials are encouraging residents to claim available credits, including the Earned Income Tax Credit, Child Tax Credit, the Keep Child Care Affordable Tax Credit, and the Schedule H property tax credit for eligible homeowners and renters. Free filing options are available through IRS Free File and local assistance programs such as Volunteer Income Tax Assistance.
Refund timing depends on how returns are filed. Electronic filings with direct deposit can result in refunds in about three weeks, while paper filings can take longer. Officials said incomplete or inaccurate returns remain the leading cause of delays.
“There [remains] considerable risk and uncertainty,” Lee wrote.
