Not all income is taxable, and not everyone has to file a return
Whether you owe taxes depends on how much you earned, what kind of income it was, and your age and filing status. The IRS sets a standard deduction — a dollar amount below which you do not have to file a federal return at all. If your total income falls below that threshold, you may have no filing requirement. But some types of income are always taxable, some are never taxed, and some are taxed only above a certain amount.
Your state may also have its own income tax with different rules. And even if you do not owe federal tax, filing a return might get you money back through refundable tax credits like the Earned Income Tax Credit (EITC).
Key Takeaways
- If your total income is below the standard deduction for your age and filing status, you have no federal filing requirement, though you may still want to file to claim refundable credits.
- Wages from a job are always taxable, but some income sources — like gifts, inheritances, and certain disability payments — are not taxed at the federal level.
- Self-employment income above $400 requires you to file and pay self-employment tax, even if your total income is below the standard deduction.
- State income tax rules differ from federal rules; some states tax retirement income differently or have no income tax at all.
- Refundable credits like the EITC can result in a refund even if you owe no tax, so filing is sometimes worth doing even when not required.
How the standard deduction works
The standard deduction is the amount of income you can earn before you must file a federal tax return. For 2024, the standard deduction is $14,600 for single filers under 65, $29,200 for married couples filing jointly under 65, and higher amounts if you are 65 or older. These amounts change each year.
If your total income is below your standard deduction, you have no legal requirement to file. However, if you had taxes withheld from your paycheck or made estimated tax payments, filing a return is the only way to get that money back. Many people below the standard deduction file anyway because they are owed a refund.
Types of income that are always taxable
Wages and salaries from any job are fully taxable. Your employer withholds federal income tax, Social Security tax, and Medicare tax from your paycheck. If you work multiple jobs or have a side gig, all of it counts toward your income total.
Self-employment income — money from freelancing, gig work, or running a business — is taxable. If you earn $400 or more in self-employment income in a year, you must file a return and pay self-employment tax (Social Security and Medicare taxes), even if your total income is below the standard deduction. This is true whether or not you had any taxes withheld.
Interest and dividends from savings accounts, investments, and bonds are taxable. Even small amounts of interest count. If you earned more than $1,250 in interest and dividends in 2024, you must file.
Rental income is taxable, including money from renting out a room, a property, or parking space. You can deduct expenses related to the rental, but the income itself is taxable.
Types of income that are not taxed
Gifts and inheritances are not taxable income to you as the recipient. The person who gave the gift or left the inheritance may have had tax consequences, but you do not owe federal income tax on what you receive.
Life insurance proceeds paid to a beneficiary are not taxable. If you inherit a life insurance payout, it is not income.
Certain disability payments are not taxed. Supplemental Security Income (SSI) is not taxable. Social Security Disability Insurance (SSDI) may be partially taxable depending on your total income, but SSI itself is always tax-free.
Workers' compensation for a work-related injury or illness is not taxable.
Child support received is not taxable income. (The person paying it cannot deduct it either.)
Income that is taxable only above a threshold
Social Security benefits are taxable only if your combined income exceeds certain thresholds. Combined income means your adjusted gross income plus nontaxable interest plus half your Social Security benefits. For a single filer in 2024, if combined income is between $25,000 and $34,000, up to 50 percent of benefits may be taxable. Above $34,000, up to 85 percent may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.
Unemployment benefits are fully taxable as income. The IRS does not require withholding, but you can request it when you file your claim.
Gambling winnings are taxable. Losses can be deducted only if you itemize deductions and only up to the amount of your winnings.
State income tax is separate from federal tax
Nine states have no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest). If you live in one of these states, you have no state filing requirement based on income alone.
The other 41 states and Washington, D.C., have income tax. Each state sets its own standard deduction, tax rates, and rules about what is taxable. Some states tax retirement income differently than the federal government does. Some states do not tax military pensions or teacher pensions. A few states tax capital gains at a different rate than ordinary income. You may owe state tax even if you owe no federal tax, or vice versa.
Check your state's tax agency website or a tax software program to find your state's standard deduction and filing requirements.
When filing is worth doing even if not required
The Earned Income Tax Credit (EITC) is a refundable credit for working people with low to moderate income. If you have a may have access to child or children, the credit can be substantial — up to $3,995 for one child in 2024. Even if you owe no tax, you can file to claim the EITC and receive a refund. You must file to get this money.
The Child Tax Credit is worth up to $2,000 per child under 17. Part of it is refundable, meaning you can get money back even if you owe no tax. Again, you must file to claim it.
If you had taxes withheld from your paycheck or made estimated tax payments, filing gets you a refund of the overpayment. This is true even if you had no legal requirement to file.
Frequently Asked Questions
Do I have to file if I made less than the standard deduction?
No federal requirement exists if your income is below the standard deduction for your filing status. However, if you had taxes withheld, you should file to get a refund. If you have a child and may may have access to for the EITC, filing is worth doing even with no income, because the credit is refundable.
Is gig work income taxable?
Yes. Income from platforms like DoorDash, Uber, Fiverr, or Etsy is self-employment income and is fully taxable. If you earn $400 or more in a year, you must file and pay self-employment tax. Keep records of your income and expenses.
What if I earned money under the table?
Cash income is taxable the same way as reported income. The IRS expects you to report all income, whether or not you received a 1099 form or your employer reported it. Failing to report income can result in penalties and interest.
Are tips taxable?
Yes. Tips are income and are taxable. Your employer should include tips in your W-2 form. If tips were not reported to your employer, you still must report them on your tax return.
Do I owe taxes on money I borrowed?
No. Loan proceeds are not income — you have to repay them. However, if a loan is forgiven (the lender cancels the debt), the forgiven amount may be taxable income. Student loan forgiveness under certain federal programs is not taxable, but other forgiven debts usually are.