Federal fiscal year 2025, commonly written as FY25, is the 12-month budget period that runs from October 1, 2024, through September 30, 2025. It governs how the federal government funds its operations, sets benefit levels, and enforces financial deadlines during that window. Congress never passed the usual set of appropriations bills for the year, funding the government instead through a full-year continuing resolution signed on March 15, 2025. FY25 also locked in a 2.5% cost-of-living adjustment for Social Security and VA benefits, raised retirement contribution limits, and brought a major reversal on corporate ownership reporting.
Why the Fiscal Year Starts in October
The federal fiscal year does not follow the calendar. Its three-month offset gives Congress a runway to finalize funding before the budget year begins, though in practice that rarely happens on schedule. The 12 months break into four quarters used for financial reporting across every federal agency:
- Q1: October 1 – December 31, 2024
- Q2: January 1 – March 31, 2025
- Q3: April 1 – June 30, 2025
- Q4: July 1 – September 30, 2025
When someone at a federal agency refers to “Q3 spending” or a “fourth-quarter obligation,” those are the dates they mean.
How FY25 Was Funded
Congress did not pass the traditional set of 12 individual appropriations bills for FY25. Agencies first operated under a short-term continuing resolution (Public Law 118-83), which held funding at the prior year’s levels while lawmakers negotiated. When those talks stalled, Congress passed the Full-Year Continuing Appropriations and Extensions Act, 2025 (Public Law 119-4), which President Trump signed on March 15, 2025.1U.S. Congress. Full-Year Continuing Appropriations and Extensions Act, 2025 That law funded the government through September 30, 2025, largely by extending FY24 spending levels with targeted adjustments.
The practical effect: most agencies could not launch new programs or shift money to emerging priorities. They were locked into the previous year’s blueprint. The underlying framework comes from the Congressional Budget Act of 1974, which sets the process Congress uses each year to agree on spending.2Office of the Law Revision Counsel. 2 USC Chapter 17A – Congressional Budget and Fiscal Operations When that process breaks down, continuing resolutions or shutdowns fill the gap. Appropriated money flows through the Treasury’s General Fund on its way to individual agencies.3Bureau of the Fiscal Service. The General Fund
The 2.5% Cost-of-Living Adjustment
The Social Security Administration announced a 2.5% cost-of-living adjustment for 2025, effective with benefits paid in January 2025.4Social Security Administration. 2025 Cost-of-Living Adjustment (COLA) Fact Sheet The increase applied to both Social Security retirement checks and Supplemental Security Income payments. The figure is calculated from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), comparing third-quarter data year over year.5Social Security Administration. Latest Cost-of-Living Adjustment
Veterans Affairs disability compensation and pension benefits received the same 2.5% increase, effective December 1, 2024. VA COLAs are tied by statute to the Social Security adjustment, so the two always move together.
The Social Security wage base, the maximum amount of earnings subject to Social Security tax, is $176,100 for 2025.6Social Security Administration. Contribution and Benefit Base Income above that threshold is not taxed for Social Security, though Medicare tax applies to all earnings with no cap.
2025 Tax Brackets and Standard Deductions
The 2025 tax year covers income earned January through December 2025 and overlaps most of FY25. The IRS adjusted every bracket threshold for inflation.7Internal Revenue Service. Federal Income Tax Rates and Brackets
Single filers:
- 10%: up to $11,925
- 12%: $11,926 to $48,475
- 22%: $48,476 to $103,350
- 24%: $103,351 to $197,300
- 32%: $197,301 to $250,525
- 35%: $250,526 to $626,350
- 37%: over $626,350
Married filing jointly:
- 10%: up to $23,850
- 12%: $23,851 to $96,950
- 22%: $96,951 to $206,700
- 24%: $206,701 to $394,600
- 32%: $394,601 to $501,050
- 35%: $501,051 to $751,600
- 37%: over $751,600
Standard deductions for 2025:8Internal Revenue Service. New and Enhanced Deductions for Individuals
- Single or married filing separately: $15,750
- Married filing jointly or qualifying surviving spouse: $31,500
- Head of household: $23,625
The federal estate tax basic exclusion is $13,990,000 for individuals who die in 2025. Estates below that threshold owe no federal estate tax. The exclusion rises to $15,000,000 in 2026 under the One Big Beautiful Bill Act (Public Law 119-21).9Internal Revenue Service. What’s New – Estate and Gift Tax
Retirement Contribution Limits
The caps for tax-advantaged retirement accounts rose modestly for 2025.10Internal Revenue Service. COLA Increases for Dollar Limitations on Benefits and Contributions
For 401(k) and 403(b) plans, the maximum employee contribution is $23,500. Workers age 50 and older can add a $7,500 catch-up, bringing the total to $31,000. Under a SECURE 2.0 provision, workers aged 60 through 63 get a higher catch-up limit of $11,250 instead of the standard $7,500, for a potential total of $34,750.
For traditional and Roth IRAs, the combined contribution limit across all your IRAs is $7,000, or $8,000 if you are 50 or older. Your contribution cannot exceed your taxable compensation for the year, and rollover contributions do not count toward the limit.11Internal Revenue Service. Publication 590-A (2025) – Contributions to Individual Retirement Arrangements
Medicare Premiums and Deductibles
Medicare figures for calendar year 2025 cover the bulk of FY25.12Centers for Medicare & Medicaid Services. 2025 Medicare Parts A and B Premiums and Deductibles
- Part B monthly premium: $185.00, up from $174.70 in 2024
- Part B annual deductible: $257
- Part A inpatient hospital deductible: $1,676 per benefit period, covering the first 60 days of a Medicare-covered hospital stay
Higher-income beneficiaries pay more through income-related monthly adjustment amounts (IRMAA), which add surcharges based on modified adjusted gross income from two years prior. If your 2023 income was high enough to trigger IRMAA, your 2025 Part B premium is above the standard $185.
Deadlines That Fall Inside FY25
Federal tax returns for calendar year 2024 income were due April 15, 2025. Returns for calendar year 2025 income are due April 15, 2026, with an extension option that pushes the filing deadline to October 15, 2026.13Internal Revenue Service. When to File An extension gives you more time to file, not more time to pay; taxes owed are still due in April.
The Free Application for Federal Student Aid (FAFSA) for the 2025–26 school year opened October 1, 2024, at the start of FY25. The federal deadline to submit is June 30, 2026.14USAGov. Free Application for Federal Student Aid (FAFSA) Many states and colleges set much earlier priority deadlines, some as early as February or March, so filing soon after the application opens is the safest approach.15Federal Student Aid. FAFSA Application Deadlines
Corporate Transparency Act Reporting No Longer Applies to Most Businesses
One compliance obligation that dominated small-business planning going into FY25 has been rolled back. The Corporate Transparency Act (31 U.S.C. 5336) originally required most small businesses and corporations to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).16Office of the Law Revision Counsel. 31 US Code 5336 – Beneficial Ownership Information Reporting Requirements After multiple legal challenges, including a federal court ruling that the law exceeded Congress’s constitutional authority, FinCEN published an interim final rule on March 26, 2025, that exempted all U.S.-formed companies and their beneficial owners from the reporting requirement.17Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting
Only entities formed under the law of a foreign country and registered to do business in a U.S. state or tribal jurisdiction must now file beneficial ownership reports. FinCEN has stated it will not enforce penalties against U.S. citizens or domestic companies. Foreign reporting companies registered before March 26, 2025, had until April 25, 2025, to file; those registering after that date have 30 calendar days. Domestic business owners who were preparing for the original filing requirement no longer have to submit.