Markus Andrews

The 2025 tax filing season will begin on Jan. 27, which marks the first day the IRS will accept and process individual tax returns for 2024. 
Most taxpayers must file federal returns and pay taxes owed by April 15 this year to avoid penalties and interest. 
Taxpayers have several free filing options, including Direct File and IRS Free File, among others.  

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Expanded free filing options for 2025

For the 2025 season, Direct File, the IRS’ free tax filing program, will be open to eligible taxpayers in 25 states. That’s up from 12 states for the 2024 season.
This year, participating states include Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington state, Wisconsin and Wyoming.
Meanwhile, IRS Free File, which offers free guided tax prep through software partners, opened on Jan. 10. Eligible taxpayers can electronically file returns prepared via Free File partners starting on Jan. 27.
Many are eligible for free tax preparation via programs like Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Another free option for military members and certain veterans is MilTax. More

There are many undisputed health benefits associated with Dry January. There’s also an economic boost.
One expert estimates the savings for the monthlong endeavor could be between $300 and $1,000, depending on consumption.
For a growing number of adults, that’s a top motivator.

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The start of a new year is the most popular time to make a resolution or two. For many, those include giving up alcohol for the first 31 days.
This year, 22% of adults are participating in Dry January, five percentage points higher than in previous years, according to a new report by Morning Consult.

“I don’t even want to call it a trend anymore because it has staying power,” said Lindsey Roeschke, author of the report.
Of those taking a break from beer, wine and mixed drinks, most were driven by the health benefits, the research found. Some adults may be particularly motivated by the U.S. Surgeon General’s recent warning that even small amounts of alcohol can cause cancer, Roeschke said. 
Forgoing alcohol entirely for a month has become a popular way to kick-start better habits. It’s credited for improved sleep, weight loss and overall wellbeing.
But the financial savings are also significant. 

How much money you can save

“Your exact savings during Dry January will hinge on your typical drinking patterns and related expenses,” said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.

“For some, skipping that occasional glass of wine might free up $50, while for those who regularly go out, the total could climb to $300 or more,” he said.
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Fred Harrington, the CEO of Coupon Mister, a site with money-saving tips, estimates that going entirely alcohol free for the month could save between $300 and $1,000, depending on consumption.
“The savings associated with cutting out alcohol for Dry January can be substantial,” Harrington said. “Even if you’re an occasional drinker, you’ll see a noticeable difference in your spending by giving up alcohol for a month.”
In fact, saving money was the third most popular reason for cutting out alcohol for the month, according to Morning Consult. Money as a top motivator “ticked up in 2022 when inflation reached its peak,” Roeschke said.

Tracking your baseline spending on alcohol is the best way to figure out how much you’ll save by going dry, advised Boneparth, who is also a member of CNBC’s Financial Advisor Council. The U.S. Department of Health and Human Services’ alcohol spending calculator can also show how much you are spending on alcohol every week, month or year.
A lot also depends on what you drink and where you live, Boneparth said. For example, a six-pack of beer from a grocery store might run $10 to $15, whereas a single cocktail at a bar could cost $12 to $18.
“Big-city bar prices are often higher than those in small towns and social habits — weekly happy hour, weekend outings — also play a huge role,” Boneparth said.

There could be an additional trickle-down effect from fewer rideshares or food orders and even less of a chance of drunk online shopping.
“It’s not just the money spent on the alcohol itself, it’s all of the ancillary things that come along with that,” said Morning Consult’s Roeschke.

How to put that savings to work

“You can put the money you save by doing Dry January to great use by, say, spending it on a health club membership, a new bike for exercise, savings or a holiday,” Harrington said.
Alternatively, that money could be well spent paying down post-holiday debt.
Most experts also recommend putting any extra cash in an emergency savings fund. Even a few hundred dollars can go a long way to providing a financial cushion when unexpected expenses arise. 
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The price growth for top drugs covered by Medicare Part D has exceeded inflation, according to a new AARP report.
The 25 drugs studied have increased by an average of 98%, or nearly doubled, since they entered the market.
The findings highlight the importance of allowing Medicare to negotiate drug prices, according to AARP.

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List prices for the top 25 prescription drugs covered by Medicare Part D have nearly doubled, on average, since they were first brought to market, according to a new AARP report.
Moreover, that price growth has often exceeded the rate of inflation, according to the interest group, which represents Americans ages 50 and over.

The analysis comes as Medicare now has the ability to negotiate prescription drug costs after the Inflation Reduction Act was signed into law by President Joe Biden in 2022.
Notably, only certain drugs are eligible for those price negotiations.
The Biden administration in August released a list of the first 10 drugs to be included, which may prompt an estimated $6 billion in net savings for Medicare in 2026.
The Centers for Medicare & Medicaid Services is scheduled to announce by Feb. 1 the list of 15 Part D drugs selected for negotiation for 2027.

AARP studied the top 25 Part D drugs as of 2022 that are not currently subject to Medicare price negotiation. However, there is a “pretty strong likelihood” at least some of the drugs on that list may be selected in the second line of negotiation, according to Leigh Purvis, prescription drug policy principal at AARP.

Those 25 drugs have increased by an average of 98%, or nearly doubled, since they entered the market, the research found, with lifetime price increases ranging from 0% to 293%.
Price increases that took place after the drugs began selling on the market were responsible for a “substantial portion” of the current list prices, AARP found.
The top 25 treatments have been on the market for an average of 11 years, with timelines ranging from five to 28 years.
The findings highlight the importance of allowing Medicare to negotiate drug prices, as well as having a mechanism to discourage annual price increases, Purvis said. Under the Inflation Reduction Act, drug companies will also be penalized for price increases that exceed inflation.
Notably, a new $2,000 annual cap on out-of-pocket Part D prescription drug costs goes into effect this year. Beneficiaries will also have the option of spreading out those costs over the course of the year, rather than paying all at once. Insulin has also been capped at $35 per month for Medicare beneficiaries.
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Those caps help people who were previously spending upwards of $10,000 per year on their cost-sharing of Part D prescription drugs, according to Purvis.
“The fact that there’s now a limit is incredibly important for them, but then also really important for everyone,” Purvis said. “Because everyone is just one very expensive prescription away from needing that out-of-pocket cap.”
The new law also expands an extra help program for Part D beneficiaries with low incomes.
“We do hear about people having to choose between splitting their pills to make them last longer, or between groceries and filling a prescription,” said Natalie Kean, director of federal health advocacy at Justice in Aging.
“The pressure of costs and prescription drugs is real, and especially for people with low incomes, who are trying to just meet their day-to-day needs,” Kean said.
As the new changes go into effect, retirees should notice tangible differences when they’re filling their prescriptions, she said. More

For those who wish to help victims of the devastating Los Angeles wildfires, here is a list of highly rated nonprofits engaged in relief and recovery efforts on the ground.
These groups have been vetted by nonprofit evaluator Charity Navigator.
Fundraising scams are already trying to capitalize on the crisis.

Firefighters work as a brush fire burns in Pacific Palisades, California on Jan. 7, 2025.
David Swanson | AFP | Getty Images

Massive wildfires are devastating the Los Angeles area of Southern California. As of Thursday morning, at least five people were killed, more than 100,000 residents have been ordered to evacuate, and nearly 2,000 homes and businesses were destroyed.
Many people around the country, and world, want to help, by donating money or emergency supplies. However, there are already fundraising scams trying to capitalize on the crisis.

To make sure your funds get into the right hands, third-party evaluator Charity Navigator compiled a list of highly rated nonprofits currently engaged in relief and recovery efforts in the Pacific Palisades and the surrounding areas — including support for first responders. 
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“We’ve vetted the organizations that are there,” said Michael Thatcher, CEO of Charity Navigator. “These are all outstanding.”
Here are some of the groups that earned high marks from the organization for providing immediate support to the victims of the wildfires and wildfire-affected communities.

During disasters like these “it’s best to donate to a highly efficient and experienced charity versus to an individual crowdfunding campaign,” said Laurie Styron, the CEO and executive director of CharityWatch. “Charities are better equipped to distribute aid equitably to everyone who needs help.”

Further, even some well-established groups may not have sufficient experience in aiding wildfire victims. The charity may lack infrastructure in the region or an explicit plan for how it will help.
If you aren’t sure how best to provide support, “don’t donate impulsively,” Styron said. “Take your time to confirm that a charity is not only legitimate and efficient but is actively providing aid on the ground.”

How to avoid wildfire-related scams

Unfortunately, as with any high-pressure donation, there will be an increase in fraudulent behavior, said Thatcher, “and what we encourage people to do is be proactive rather than reactive to a solicitation.”
As a general rule, rather than follow a link in a text, email or on social media, go directly to a charity’s website or find a relief effort through a site such as Charity Navigator, BBB Wise Giving Alliance or CharityWatch, Thatcher said.
“There’s a safety element and a legitimacy element,” he said. “At the end of the day we want to make a difference to the people affected by this fire.”

The BBB Wise Giving Alliance also offers tips for donating to the California wildfire relief efforts.
It recommends donors check whether a charity is accredited and take extra precautions on crowdfunding sites, including reviewing how postings are screened as well what transaction fees may apply.
In addition, be wary of relief appeals that have vague descriptions or do not explain what programs your support will assist.
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The fourth-quarter estimated tax deadline for 2024 is Jan. 15, and you could trigger “unexpected penalties and fees” by skipping a payment, according to the IRS.
You typically owe estimated taxes with income from self-employment, small businesses, investments, gig economy work and more.
Tax filers may avoid late payment penalties by sending 90% of 2024 taxes or 100% of 2023 levies if adjusted gross income is less than $150,000.

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The fourth-quarter estimated tax deadline for 2024 is Jan. 15, and missing a payment could trigger “unexpected penalties and fees” when filing your return, according to the IRS.
Typically, estimated taxes apply to income without withholdings, such as earnings from freelance work, a small business or investments. But you could still owe taxes for full-time or retirement income if you didn’t withhold enough.

You could also owe fourth-quarter taxes for year-end bonuses, stock dividends, capital gains from mutual fund payouts or profits from crypto sales and more, the IRS said.    
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Federal income taxes are “pay as you go,” meaning the IRS expects payments throughout the year as you make income, said certified public accountant Brian Long, senior tax advisor at Wealth Enhancement in Minneapolis. 
If you miss the Jan. 15 deadline, you may incur an interest-based penalty based on the current interest rate and how much you should have paid. That penalty compounds daily.
Tax withholdings, estimated payments or a combination of the two, can “help avoid a surprise tax bill at tax time,” according to the IRS.

What to know about the ‘safe harbor’ rules

One way to avoid penalties is by following the “safe harbor” rule, which means “you’re meeting that [IRS] pay-as-you-go requirement,” according to Long. 
To satisfy the rule, you must pay at least 90% of your 2024 tax liability or 100% of your 2023 taxes, whichever is smaller.
The threshold increases to 110% if your 2023 adjusted gross income was $150,000 or higher, which you can find on line 11 of Form 1040 from your 2023 tax return.

However, you could still owe taxes for 2024 if you make more than expected and don’t adjust your tax payments.
“The good thing about this last quarterly payment is that most individuals should have their year-end numbers finalized,” said Sheneya Wilson, a CPA and founder of Fola Financial in New York.

How to make quarterly estimated tax payments

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Smoke billows as fire burns while powerful winds fueling devastating wildfires in the Los Angeles area force people to evacuate, at the Eaton Fire in Altadena, California, U.S. January 8, 2025. 
David Swanson | Reuters

Fear and uncertainty surrounding the wildfires in California appear to be weighing on shares of Edison International, whose Southern California Edison is the power utility for the areas directly surrounding the city of Los Angeles.
The stock fell 10.2% on Wednesday and was down more than 13% at session lows.

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Utility stock Edison International fell sharply Wednesday.

The drop comes as multiple large fires are burning around Los Angeles, with strong winds making them difficult to contain. Tens of thousands of people have been ordered to evacuate, and at least two people have died, according to the Associated Press.
More than 3 million Edison customers were dealing with outages Wednesday, according to the utility’s website.
Public utilities have been grappling with issues around wildfire prevention and readiness for years. Previous wildfires in California have been linked to issues with power equipment, but so far there is no public information tying Edison to the fires.
“At this time, there is no indication that SCE equipment is believed to have started the fire, as SCE has not filed an electric service incident report (ESIR). … There are multiple media reports indicating SCE equipment has been at least impacted by the fires and we would expect some incremental expenses related to the fire, regardless of ignition source,” Bank of America analyst Ross Fowler said in a note to clients Wednesday.

Smoke engulfs buildings off Sunset Boulevard during a wildfire in the Pacific Palisades neighborhood of west Los Angeles, California, January 7, 2025. 
Mike Blake | Reuters

Previous wildfires have had massive financial impacts on utilities and their investors. Northern California utility Pacific Gas and Electric Company filed for bankruptcy in 2019, in large part due to its liability from wildfires. The utility exited bankruptcy in 2020.

However, a 2020 state law known as AB 1054 limited the liability for utility companies going forward.
“Investors remain nervous from our conversations given the lack of containment with a ‘sell first, ask questions later’ mindset. We remain comfortable due to the AB 1054 liability protections that limits the tail risks for the utilities,” Jefferies analyst Julien Dumoulin-Smith said in a note to clients Wednesday.
Other California utility stocks were also down Wednesday. Shares of the reconstituted PG&E fell 3.7%. Sempra, whose footprint includes power and gas in the San Diego area, was down 1.7%. Sempra’s SDG&E said on its website that it has shut off power to about 9,000 customers due to fire risks.
— CNBC’s Michael Bloom contributed reporting. More

Nearly 3 million Americans are poised to see bigger Social Security benefit checks.
For some, that could trigger larger tax bills and Medicare premium payments, experts say.

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Nearly 3 million individuals are poised to see their Social Security benefits increase, thanks to new changes signed into law by President Joe Biden this week. But with the higher checks could come additional tax burdens.
The Social Security Fairness Act — which passed by a bipartisan majority in both the House and Senate — ends reductions of Social Security benefits for certain individuals who also receive pension income from work in the public sector as firefighters, police officers, teachers and local, state and federal employees.

Those beneficiaries are set to see an increase to their monthly benefit checks. Because the legislation applies to benefits paid throughout 2024, they will also receive lump-sum payments to make up for that time.
The details of how those increases will be implemented are now being determined, according to the Social Security Administration.
In total, the benefit increases will cost $196 billion over a decade, according to the Congressional Budget Office. The additional outlay will move Social Security’s trust fund depletion dates six months closer. The program’s combined trust funds may pay full benefits until 2035, at which point just 83% of scheduled benefits may be payable, the program’s trustees projected last year.

How Social Security benefits may change

About 2.1 million beneficiaries — those who were affected by the Windfall Elimination Provision, or WEP — may see $360 more in monthly benefits on average, according to CBO estimates as of December 2025. The WEP, which has now been eliminated, reduced Social Security benefits for workers who also had pension or disability benefits from jobs where they did not pay Social Security payroll taxes.
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Additionally, about 380,000 spouses would see average monthly benefit increases of $700 and 390,000 surviving spouses would see an average of $1,190 more, according to CBO’s estimates for December 2025.
Those beneficiaries were affected by the now-defunct Government Pension Offset, or GPO, which reduced Social Security benefits for spouses, widows and widowers who also receive their own pensions from public sector work.
The elimination of the provisions in many ways simplifies retirement income planning for affected beneficiaries, financial advisors say.
“For the people who are affected by this, you’re looking at a pretty significant increase, in many cases, of what their retirement income is going to be,” said Michael Daley, director of marketing at HealthView Services. “It’s good news for them.”
For financial planners and their clients, the challenge now is gauging how much of a benefit increase to expect and when to expect it, said Joe Elsasser, founder and president of Covisum, a Social Security claiming software company.
The extra income may also present some complications when it comes to affected beneficiaries’ taxes and Medicare premiums, experts say.

Beneficiaries could see higher taxes on benefits

Social Security beneficiaries may have their benefits taxed if their income falls over certain thresholds, experts say.
The additional money may also push some affected beneficiaries into higher tax brackets, according to HealthView Services.
Notably, President-elect Donald Trump has said he wants to nix taxes on Social Security benefit income, though it remains to be seen whether that change will be put into effect. However, per current rules, up to 85% of Social Security benefit income may be taxed.
The income thresholds upon which those levies are based are not adjusted annually for inflation. Consequently, more beneficiaries are subject to those taxes on benefits over time, including middle-class households, Daley said.
Those levies are determined based on a formula called combined income — the sum of adjusted gross income, nontaxable interest and half of Social Security benefits.

Individuals pay taxes on up to 50% of their benefits if their combined income is between $25,000 and $34,000, or for married couples with between $32,000 and $44,000.
Individuals may pay taxes on up to 85% of their benefits if their combined income is more than $34,000; or for married couples with more than $44,000.
“Because Social Security benefits are taxed differently than everything else, people are going to really want to pay attention to their other sources of income,” Elsasser said of the anticipated benefit increases and lump-sum payments.
For example, if a retiree has both a taxable account and traditional individual retirement account, they may want to prioritize withdrawals from the taxable account because only the gains would be taxed rather than the entire withdrawal, Elsasser explained. In the event the lump-sum payment of retroactive Social Security benefits is not distributed, they may take an IRA withdrawal later in the year.

Beneficiaries may see higher Medicare costs

Additional benefit income for individuals affected by the Social Security Fairness Act may also result in higher income-based surcharges for Medicare Parts B and D.
Medicare beneficiaries with higher incomes must pay what’s known as income-related monthly adjustment amounts, or IRMAAs, for their Part B and Part D premiums.
“If you get a lump sum but you’re not paying attention to your other incomes, you could unwittingly be pushed into higher Medicare premiums two years down the road,” Elsasser said.

That will mostly be a concern for people who are on the cusp of the income thresholds, he said.
In 2025, Medicare Part B beneficiaries who file individual tax returns with $106,000 or less in modified adjusted gross income — or married couples who file jointly with $212,000 or less — pay a standard monthly premium of $185 per month.
Beneficiaries above those income thresholds pay higher Part B premium payments, based on an IRMAA. This year’s rates are based on income on tax returns filed in 2023.
In 2025, Part D beneficiaries over the $106,000 threshold for individuals and $212,000 for married couples are also subject to income-related monthly adjustment amounts in addition to their plan premiums. Those monthly premiums are also based on yearly income reported on tax filings for 2023. In 2025, the national base Part D premium is $36.78.

Steps to take now

Beneficiaries who are affected by the Social Security Fairness Act should consider consulting with a financial advisor to assess the implications of the change on their personal financial circumstances, said Ron Mastrogiovanni, chairman and CEO of HealthView Services.
Additionally, it would help to sit down with a certified public accountant when filing their taxes to plan for 2025, he said.
The Social Security Administration also plans to provide more guidance on the new law as more details become available.
For now, the agency recommends verifying that direct deposit and the mailing address it has on file are still accurate. To update that information, Social Security recommends changing it online or calling or visiting an agency office in person.
Some individuals may now become eligible for Social Security benefits for the first time, now that the WEP and GPO provisions have been eliminated.
To file for benefits, the Social Security Administration recommends either filing online or scheduling an appointment with the agency.

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National Taxpayer Advocate Erin Collins has urged Congress to preserve IRS funding for taxpayer service and technology amid Republican scrutiny.
The Inflation Reduction Act of 2022 originally authorized nearly $80 billion for the agency, but tens of billions of dollars have already been rescinded.
More IRS funding could be at risk with Republican control of Congress and the White House.

Erin Collins, national taxpayer advocate at the Taxpayer Advocate Service, speaks at a Senate Appropriations subcommittee hearing in Washington, D.C., on May 19, 2021.
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As the IRS faces scrutiny from a Republican-controlled Congress, the agency’s internal watchdog has urged lawmakers to preserve taxpayer service and technology funding.
The National Taxpayer Advocate on Wednesday released its annual report to Congress, which criticized the “extreme imbalance in funding priorities” when comparing the billions of dollars allocated via the Inflation Reduction Act.

While the tens of billions earmarked for enforcement has “generated controversy,” there’s been “strong bipartisan support” for taxpayer services and technology modernization, wrote Erin Collins, national taxpayer advocate.
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Of the original $78.9 billion Inflation Reduction Act funding, the legislation earmarked 58% for enforcement and 32% for operations support, according to the report. By comparison, the budget allocated 4% for taxpayer service and 6% for technology modernization.  
With sufficient funding for services and technology, “taxpayer experiences will become fairer and more efficient, which likely will improve compliance and reduce the need for costly backend enforcement,” Collins wrote.

During fiscal year 2024, the IRS collected $98.7 billion through enforcement, which was less than 2% of all revenue, according to the agency’s 2024 financial report. The remaining 98% of federal taxes were “self-assessed” via annual tax returns and timely payments. 

If Congress reduces enforcement funding, it shouldn’t include commensurate cuts to taxpayer services and technology, which could “inadvertently throw the baby out with the bathwater,” Collins wrote. 
With added costs to “pull itself out of the pandemic” and yearly appropriations held steady amid rising costs over the past few years, the IRS has needed to spend part of its multi-year funding to maintain current operations, she added.  

Congress rescinded $20 billion in IRS funding as part of a 2023 budget deal, and Republicans have vowed to make further cuts. Another $20 billion was automatically clawed back when lawmakers in December extended the 2023 deal to avoid a government shutdown.  
Further IRS funding cuts could be possible in 2025 with Republican control of Congress and the White House. More