What’s New

Changes to State and Local Tax Deduction Worksheet. We revised the State and Local Tax Deduction Worksheet. The purpose of the revision was to resolve an issue with the prior worksheet which may affect the deduction calculation for certain filers with adjusted gross income of more than $500,000. If your 2025 adjusted gross income was not more than $500,000 the changes to the worksheet will not impact the calculation of your state and local tax deduction.

We revised lines 4, 6, and 7 of the worksheet. We also added new line 8. Line 8 is now the last line of the worksheet and contains the amount of your state and local tax deduction.

If you have previously filed your 2025 Form 1041 and used the prior version of the State and Local Tax Deduction Worksheet to determine your state and local tax deduction, and doing a recalculation using the updated State and Local Tax Deduction Worksheet results in a higher deduction, you should file an amended 2025 Form 1041.

Due date of return. Calendar-year estates and trusts must file Form 1041 by April 15, 2026.

Electronic payments. If you have access to U.S. banking services or electronic payment systems, you should use direct deposit for any refunds. The IRS recommends paying electronically whenever possible.

Direct deposit. We have added direct deposit fields. If there is an overpayment on line 29, enter your direct deposit information on lines 30c, 30d, and 30e. See the instructions for line 30b, later, for more information.

Instructions for Form 1041 (2025) Catalog Number 11372D Mar 5, 2026 Department of the Treasury Internal Revenue Service www.irs.gov

Making a payment. If there is a balance due on line 28, go to IRS.gov/Payments for information on how to make a payment. See the instructions for line 28, later, for more information.

Gain from the sale or exchange of qualified farmland property to qualified farmers. P.L. 119-21, commonly known as the One Big Beautiful Bill Act, created a new section 1062 regarding the gain from the sale or exchange of qualified farmland property to qualified farmers. Section 1062 allows taxpayers to elect to pay the net income tax attributable to the gain from the sale or exchange of qualified farmland property to qualified farmers in four equal annual installments. This election is available for qualified sales and exchanges in tax years beginning after July 4, 2025. For more information, see section 1062 and new Form 1062, Deferral of Tax on Gain From the Sale or Exchange of Qualified Farmland Property to Qualified Farmers, when it is available.

To report the section 1062 applicable net tax liability and the installment due in the first tax year, two lines were added on Form 1041. Report the full amount of section 1062 applicable net tax liability on Schedule G, Part II, line 18c. Report the first installment due in tax year 2025 on page 1, line 25b. For more information, see the instructions for line 18c and line 25b, later.

Capital gains and qualified dividends. For tax year 2025, the 20% maximum capital gains rate applies to estates and trusts with income above $15,900. The 0% and 15% rates apply to certain threshold amounts. The 0% rate applies to amounts up to $3,250. The 15% rate applies to amounts over $3,250 and up to $15,900.

Bankruptcy estate filing threshold. For tax year 2025, the requirement to file a return for a bankruptcy estate applies only if gross income is at least $15,750.

Qualified disability trust. For tax year 2025, a qualified disability trust can claim an exemption of up to $5,100. This amount is not subject to phaseout.

Section 174A. P.L. 119-21 adds new section 174A to the Internal Revenue Code. Section 174A(a) allows taxpayers to deduct amounts paid or incurred for domestic research and experimental expenditures in tax years beginning after December 31, 2024. Alternatively, under section 174A(c), a taxpayer may elect to charge such expenditures to capital account and amortize such expenditures ratably over a period of not less than 60 months, beginning with the month in which the taxpayer first realizes benefits from such expenditures. In addition, section 70302(f) of P.L. 119-21 provides taxpayers with various transition options that may be applied to recover unamortized amounts paid or incurred in tax years beginning after December 31, 2021, and before January 1, 2025, that were capitalized and amortized for such tax years. See Rev. Proc. 2025-28 for information regarding the transition options contained in section 70302(f) of P.L. 119-21, as well as the procedures to follow to begin applying either section 174A(a) or (c) for the taxpayer’s first tax year beginning after December 31, 2024.