Updated October 19, 2026. Quick answer: Publication 525 is the IRS guide to what counts as income and what does not. It runs from wages and fringe benefits through gig income, refunds, benefits and gifts. This edition is the one “For use in preparing 2025 Returns”.
Quick reference
| Item | As the IRS publication states it |
|---|---|
| Health FSA salary reduction limit, tax years beginning in 2025 (What’s New) | $3,300 |
| Employee achievement award exclusion cap (Employee Compensation) | $1,600 ($400 for awards that aren’t qualified plan awards) |
| Qualified overtime deduction (Other Income) | up to $12,500 ($25,000 if married filing jointly) |
| Qualified tips deduction (Other Income) | no more than $25,000 |
| Modified adjusted gross income where those deductions are limited (Other Income) | more than $150,000 ($300,000 if married filing jointly) |
What the publication covers
The introduction says “You can receive income in the form of money, property, or services.” “This publication discusses many kinds of income and explains whether they are taxable (included in income) or nontaxable (excluded from income).”
It also gives the basic rule: “In most cases, an amount included in your income is taxable unless it is specifically exempted by law.”
Chapters and parts in plain words
The main sections run roughly in this order: Employee Compensation (including miscellaneous compensation and fringe benefits), Retirement Plan Contributions, Stock Options, Restricted Property, and Special Rules for Certain Employees such as clergy, the military and volunteers. Business and Investment Income covers rents, royalties, partnership income and S corporation income.
The rest covers Sickness and Injury Benefits, Miscellaneous Income such as bartering, Life Insurance Proceeds, Recoveries, Sharing/Gig Economy, Survivor Benefits, Unemployment Benefits, Welfare and Other Public Assistance Benefits, Social Security and equivalent railroad retirement benefits, and a long Other Income list that includes alimony, gambling winnings and gifts and inheritances.
Worksheets, tables and charts inside
The publication carries “Worksheet 1. Figuring the Cost of Group-Term Life Insurance To Include in Income” and “Worksheet 2. Recoveries of Itemized Deductions”, with Worksheet 2a as a companion for lines 1a and 1b. Worksheet 2 sits in the Recoveries section, which also deals with state tax refunds.
For the return lines where these amounts land, see Schedule 1 (Form 1040) and Schedule 1 line 1 on state and local refunds.
The figures that matter
On health FSAs, the IRS publication says “For tax years beginning in 2025, the dollar limitation under section 125(i) on voluntary employee salary reductions for contributions to health FSAs is $3,300.”
On achievement awards, it says “the amount you can exclude is limited to your employer’s cost and can’t be more than $1,600 ($400 for awards that aren’t qualified plan awards) for all such awards you receive during the year.”
On overtime, it says “If you earned qualified overtime, you may be eligible to deduct up to $12,500 ($25,000 if married filing jointly) of your qualified overtime compensation.” On tips, it says “You can’t deduct more than $25,000 of those tips.” For both, “Your deduction will be limited if your modified adjusted gross income is more than $150,000 ($300,000 if married filing jointly).”
Everyday items readers look up
On gifts, the publication says “In most cases, property you receive as a gift, bequest, or inheritance isn’t included in your income.” On unemployment, it says “Generally, you must include in income all unemployment compensation you receive.”
On gig work, it says “Generally, if you have income from sharing economy transactions, or you did gig work, you must include all income received whether you received a Form 1099-K, Payment Card and Third Party Network Transactions, or not.”
On child support, it says “Amounts you receive for child support aren’t income to you.” On gambling, it says “If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.”
Where to go next
See do you pay tax on gifts received, Form 1099-G box 1, the Form 1099-K threshold, and Form 1040 lines 6a and 6b.
Where this comes from
The IRS page About Publication 525 opens with “You can receive income in the form of money, property, or services.” It links the PDF and eBook editions and the earlier revisions of the publication.
This page describes the web edition of Publication 525 (2025), Taxable and Nontaxable Income, as served on irs.gov on October 19, 2026. The IRS can revise a publication after we read it, and the IRS page controls. General information, not tax or legal advice.
Common mistakes
- Waiting to count a check until it is cashed. The IRS publication says “If you’re a cash-method taxpayer, you’re generally taxed on income that is available to you, regardless of whether it is actually in your possession.”
- Assuming no Form 1099-K means no gig income. The publication says to include all income received whether or not you received the form.
- Assuming income from an inherited asset is also tax free. The publication says “However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you.”
- Assuming nontaxable means never reported. The publication says “Income that is nontaxable may have to be shown on your tax return but isn’t taxable.”
Related: IRS publications by number, Schedule 1 (Form 1040), Do you pay tax on gifts received, Form 1099-G box 1, Form 1099-K threshold, and Form 1040 lines 6a and 6b.
Sources
- IRS, Publication 525 (2025), Taxable and Nontaxable Income (irs.gov): https://www.irs.gov/publications/p525
- IRS, About Publication 525 (irs.gov): https://www.irs.gov/forms-pubs/about-publication-525
Read from the IRS pages linked above on October 19, 2026. General information, not tax or legal advice. The IRS publication and the instructions for your own form control, and your own facts decide the outcome.