What Is Tax Relief, and How Can It Benefit You in 2025?

Tax relief is all about lowering the amount of tax you owe, which means you can keep more of your hard-earned money. In this guide, we break down what tax relief is, how it works, and the different ways you might qualify for savings.

Whether you’re new to the idea or looking to optimize your finances, we’ve got you covered with clear, straightforward advice.

Table of Contents

1. Types of tax relief
   1. If you are up to date on tax payments
   2. If you are behind
2. Should I work with the IRS directly or hire a tax relief firm?
3. Consequences of not paying your tax debts

Types of tax relief

Tax relief can come in different forms, depending on whether you are current on tax payments:

• Tax relief if you’re up to date on tax payments
• Tax relief if you’re behind on tax payments

Tax relief if you are up to date on tax payments

If your taxes are up to date, deductions, credits, and exclusions can help you reduce your taxable income or lower your actual tax bill.

• Tax deductions: Reduce your taxable income. You might be able to deduct mortgage or student loan interest, property taxes, charitable donations, and business expenses. In 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly.
• Tax credits: Reduce your actual tax bill. For example, the Child Tax Credit is $2,000 per child for 2024 and 2025. (It’s set to drop to $1,000 per child after 2025.) If you have one child, a $10,000 tax bill would be reduced to $8,000 after the current credit.
• Tax exclusions: You can exclude employer-provided health insurance, some foreign income, and disability payments from your taxable income.

Often-overlooked tax deductions and credits include:

1. Retirement contributions to tax-advantaged retirement accounts—for example, IRA and 401(k).
2. If you own a home and itemize, consider the mortgage interest deduction. It’s also possible to deduct refinancing points.
3. You might be able to deduct property taxes.
4. Health savings account (HSA) contributions are tax-deductible. Not only does the money grow tax-free when you use it for qualified healthcare costs, but you can use your contributions to reduce your tax liability.

No matter your tax deduction, be sure to properly document your situation. Keep receipts to back you up. Before you take a deduction, make sure you can prove that you are entitled to it, and consider consulting a tax professional about your eligibility.

Tax relief if you are behind on payments

If you owe back taxes, you might be able to set up a repayment plan or settle your debt for less than you owe. Here’s how you can get out of tax debt.

Fresh Start Program

The IRS Fresh Start Program lets taxpayers settle tax debt for less than the full amount. This program requires filing an Offer in Compromise considering your income, assets, and expenses.

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Tip

Use the IRS offer in compromise pre-qualifier tool to check your eligibility.

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Navigating the IRS Fresh Start Program can be complex, which is where Anthem Tax Services comes in. With its team’s expertise in tax relief, Anthem Tax Services can help you prepare a strong Offer in Compromise by assessing your income, assets, and expenses.

Anthem can work with you to maximize your chances of settling your tax debt for less than what you owe, easing the stress of the process and giving you a clearer path toward financial stability.

Installment agreements

These allow you to pay off your tax debt over time. Plans range from short-term (under 120 days) to long-term (more than 120 days).

Plan type	Eligibility criteria	Fees
Less than 120 days	Individuals owing $50K or less	$0
Long-term option 1 (>120 days)	Individuals owing $100K or less; Businesses owing $250K or less	$31 – $107
Long-term option 2 (>120 days)	Individuals owing $100K or less; Businesses owing $25K or less; Various payment options	$149 – $225

See more about payment plans on the IRS website.

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Tip

When it comes to setting up an installment agreement that fits your situation, Larson Tax Relief can be a game changer. Larson’s expert team helps you navigate the IRS payment plan process, ensuring you understand your eligibility and choose the best plan. With personalized guidance and support, Larson Tax makes it easier to manage fees and meet IRS requirements, so you can focus on regaining financial stability.

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The most important consideration when choosing a payment plan is having a budget and getting accepted into a payment plan that works with your budget. These are great opportunities to fix a difficult situation, but they will not do you any good if you can’t afford the payments.

Penalty relief or interest abatement

You might be able to reduce or waive penalties and interest if you have a reasonable cause (e.g., natural disaster or family death). Consult the IRS or a tax professional to gauge your chances.

Our top-rated tax relief companies can help you determine whether this relief is an option for you.

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Do tax relief companies really work?

Should I work with the IRS directly or hire a tax relief firm?

You have two main options: handle your tax relief with the IRS or hire a professional tax relief company.

Here are the pros and cons of working with a tax relief firm.

Pros

• Professional guidance

• Less work on your part

• Potentially better chance at success

• More experience

Cons

• Risk of scams

• Added costs

• No guarantee of relief

Check out our guide to tax relief scams to avoid.

Consequences of not paying your tax debts

Failure to pay taxes can result in serious penalties, including wage garnishments, property liens, and even the revocation of your driver’s license or passport. Interest charges and penalties will also continue to accrue, adding to your overall debt.

The IRS is considered a super-creditor because the law includes provisions that enable the IRS to collect unpaid tax debts in situations where non-IRS creditors couldn’t.

Failing to pay your taxes can be challenging. I recommend taking care of it as soon as possible because the IRS has more power to collect your debts. The IRS can force you to pay using several tools, including federal tax liens, levies, and wage garnishments. And that’s on top of penalties and interest that will pile up.

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Does IRS debt go away?

Recap of your tax relief options

Here’s a summary of your options if you’re seeking tax relief:

Relief	How it helps	Who can help
Tax deductions	Lowers taxable income	Your tax preparer
Tax credits	Lowers the actual tax bill	Your tax preparer
Tax exclusions	Excludes a portion of income from taxation	Your tax preparer
Fresh Start Program	Settles tax debt for less than you owe	IRS or tax relief company
Installment agreements	Allows gradual repayment of tax debts	IRS or tax relief company
Penalty relief & interest abatement	Reduces or waives fees and interest costs	IRS or tax relief company