What Year of Taxes Does FAFSA Need?
Understand FAFSA's tax year requirements for financial aid. Learn the rules, determine the correct data, and navigate unique circumstances for a successful application.
The Free Application for Federal Student Aid (FAFSA) serves as a gateway to various forms of financial assistance for higher education, including grants, scholarships, work-study programs, and federal student loans. Accurately providing financial information, particularly tax data, is a fundamental step in this application process. A common question for students and families navigating this system is identifying which tax year’s information is required for their FAFSA submission.
The Prior-Prior Year Rule
The FAFSA uses the “prior-prior year” (PPY) rule for income reporting. This means applicants report income and tax information from two years before the academic year they seek aid. For example, for the 2025-2026 academic year, 2023 tax information is required.
This change, implemented for the 2017-2018 FAFSA cycle, allows students and families to complete the FAFSA earlier. Previously, applicants often estimated income because the FAFSA opened before tax returns were typically filed, leading to potential inaccuracies. Using finalized PPY tax data reduces errors and allows families to receive financial aid offers sooner, assisting with college planning.
Determining Your Required Tax Year
To determine the specific tax year for your FAFSA, subtract two years from the start of the academic year you plan to attend. For example, the 2024-2025 FAFSA requires 2022 tax information, while the 2025-2026 FAFSA uses 2023 tax data. The 2026-2027 FAFSA will use 2024 tax data.
The necessary tax information is primarily found on your federal income tax return, IRS Form 1040, along with any applicable schedules like Schedule 1, Schedule C, or Schedule F. Wage and tax statements, such as Form W-2, are also important. To streamline the process and ensure accuracy, the FAFSA now uses the Direct Data Exchange (DDX) to securely transfer federal tax information directly from the IRS into the application. Applicants and their contributors must provide consent for this data exchange to be eligible for federal student aid. While the DDX often populates most income fields automatically, it is still advisable to have your tax returns on hand for verification purposes.
Addressing Significant Income Changes
Sometimes, a family’s financial situation may change significantly after the prior-prior tax year, such as due to job loss, a substantial reduction in income, or unexpected medical expenses. The initial FAFSA submission, based on the prior-prior year, will not reflect these current circumstances. Applicants cannot directly adjust the FAFSA to reflect these changes.
Instead, complete and submit the FAFSA with the required prior-prior year tax information. Then, contact the financial aid office at the colleges they plan to attend to discuss their changed financial situation. Financial aid administrators have the authority, known as “professional judgment,” to adjust aid eligibility on a case-by-case basis due to documented special circumstances.
To support a request for professional judgment, families will typically need to provide documentation of their hardship, such as unemployment statements, severance letters, or unreimbursed medical bills that exceed a certain percentage of their adjusted gross income. The financial aid office will review this evidence and may make adjustments to the data elements on the FAFSA, which could lead to a recalculation of aid eligibility.
Guidance for Non-Filers
For individuals who were not required to file a federal income tax return for the prior-prior year, completing the FAFSA still remains possible. These non-filers should indicate on the FAFSA that they “will not file” a tax return. They will then typically report “0” for their adjusted gross income (AGI) and income earned from work, if they had no taxable income.
Non-filers still need to provide information about any untaxed income they received, such as Social Security benefits, child support, or other untaxed earnings. If selected for verification, non-filers may be asked to provide a “Verification of Non-Filing” letter from the IRS. This document provides official proof that the IRS has no record of a filed Form 1040 for the specified tax year. This letter can be obtained from the IRS by requesting a tax transcript online or by mail using IRS Form 4506-T. Some institutions may also accept a signed statement from the individual certifying their non-filing status and listing sources and amounts of income earned from work.