October 2026 · Taxes, Small Business

The October 15 Deadline for Anyone Who Filed a Tax Extension

What a late return costs, the penalty that gets cut in half with a payment plan, and the retirement account still open for last year

Six months ago, anyone who could not finish a return by April 15 filed Form 4868 and bought extra time to file, not to pay.[1] That extra time runs out October 15, and for most extension filers, it is the real deadline this year, not the placeholder one from the spring. The April post explained what the extension bought; this one explains the penalties, the interest, and the options once it runs out.

What is due October 15

Three things land on the same date:

Form 1040: the 2025 return itself, complete rather than estimated.
Arizona Form 140: the state return, extended automatically alongside the federal one, with no separate Arizona form required.[2]
SEP-IRA contributions: for the self-employed and small business owners, the last day to open and fund one for 2025: up to 25 percent of each employee's pay, capped at $70,000, while a self-employed owner's own limit works out to about 20 percent of net self-employment earnings.[3]

The bill was already due in April

The extension moved the paperwork, not the money: whatever the 2025 return owes was due April 15, and interest has been running on any shortfall every day since, extension or not.

The rate for individual underpayments is 7 percent a year for the current quarter, compounded daily, and it resets every three months rather than staying fixed for the year.[4]

What a late return actually costs

Once October 15 passes with no return filed and no exception applying, the failure-to-file penalty starts: 5 percent of the unpaid tax for every month or partial month the return is late, up to 25 percent.[5]

After 60 days, a minimum applies: $525, or the full tax owed if that is less. So a delay of a few months turns even a small balance into a real bill.[5]

A second penalty, failure to pay, runs alongside it at 0.5 percent a month, capped at 25 percent on its own. The two do not simply stack: in a month where both apply, the failure-to-file penalty drops to 4.5 percent, so the combined rate holds at 5 percent.[6]

If a refund is coming, there is no penalty, but there is a deadline

The failure-to-file penalty is a percentage of unpaid tax, so a return with a refund coming owes no penalty, no matter how late it is filed.[5]

The refund itself is not owed forever: a claim generally must be filed within three years of when the return was filed, or two years of when the tax was paid, whichever is later.[7] After that, the money is forfeited to the Treasury.

If you cannot pay, file anyway

For a balance actually owed, filing by October 15 and requesting a payment plan beats not filing at all. A short-term plan, up to 180 days, has no setup fee online for balances under $100,000. A long-term installment agreement covers larger or slower payoffs, with online setup fees starting at $29.[8]

An approved plan also cuts the failure-to-pay penalty in half, to 0.25 percent a month, as long as the return itself was filed on time, which for an extension filer means by October 15.[6] Filing late and paying late is the expensive combination; filing on time and paying slowly is the cheap one.

The SEP-IRA window closes with it

Self-employed owners and small businesses get one more thing on this date: a SEP-IRA for 2025 can still be opened and funded up to the extended filing deadline.[3] The year-end checklist already flagged the difference between the two retirement accounts: a solo 401(k) generally had to exist by December 31 to count for 2025, while a SEP-IRA rides the extension all the way to October.

The Arizona homework

Arizona does not require a separate extension request. Filing federally under Form 4868 extends the state return to October 15 automatically, and the only step is checking the extension box on Arizona Form 140 when it is filed.[2]

The 90 percent payment test that avoids Arizona's extension underpayment penalty was an April 15 test, so it was already met or missed months ago, and October 15 does not change it.[2]

If October 15 is not enough

Two situations reach past October 15. Anyone serving in a designated combat zone gets at least 180 days after leaving it to file and pay, penalty-free and interest-free, with no form required to claim it.[9] A federally declared disaster can push the deadline back further, on a schedule the IRS sets for each one.[10]

Outside those two situations, October 15 is final, and no further extension exists to request.

The bottom line

File by October 15, whether or not the money to pay is ready: the return and the payment are penalized separately, and filing alone stops the larger penalty. If the SEP-IRA, a payment plan, or the Arizona side raises a question specific to your situation, a free consultation before the fifteenth is faster than untangling it after.