SAFE Act

This bill would let people avoid the IRS “failure-to-pay” penalty if they pay at least 125% of last year’s income tax by the payment deadline. It only removes that penalty; it doesn’t erase any tax you still owe. You must still file your tax return on time and follow the rules below to keep this protection.

Key points

• Who is affected: Individual taxpayers, including couples who file jointly. Special rules explain how to count last year’s tax if you switch between joint and separate filing from one year to the next.
• What changes: If you pay 125% of last year’s tax by the deadline, the late-payment penalty won’t apply. This does not apply if you didn’t file a return last year, if last year’s tax year was shorter than 12 months, or if you don’t file this year’s return on time. Also, this protection ends once you file your return or when the filing deadline passes; any extra tax due must be paid with your timely filed return.
• When: Applies to tax years starting after December 31, 2024.