Will a 2026 Bankruptcy Filing Change Your April Tax Bill?

 Posted on December 20, 2025 in Bankruptcy

January is one of the most common months for bankruptcy filings in Texas and across the nation. If you are like many Texans, you may be considering filing for bankruptcy at the beginning of 2026. Perhaps the financial strain of the holidays was too much, or the entire year was difficult financially.

New year, fresh financial start, right? But when you file bankruptcy in early 2026, you must consider how it will affect your taxes when April rolls around. Tax season is stressful enough, but when you combine taxes and bankruptcy, the results may not be what you expected. Your ultimate decision will depend on several factors, including the type of bankruptcy you plan to file, whether you owe back taxes, and whether you expect a refund.

The bottom line is that timing matters more than most people realize, and it is important that you fully understand all the tax implications of filing bankruptcy early in the year. To avoid unexpected complications, consulting with an experienced Fort Worth, TX bankruptcy attorney is the best step you can take.  

Does the Timing of Bankruptcy Matter for Taxes?

Filing for bankruptcy in the first three months of the new year places you squarely in the overlap between bankruptcy law and tax law. Bankruptcy looks backward at your financial obligations, and tax season focuses on income earned in 2025.

Since tax refunds and tax debts are treated as financial assets or liabilities when filing for bankruptcy, the timing of your filing has a direct bearing on how they are treated. If you are expecting a tax refund, filing for bankruptcy could have a significant impact on whether or not you will get that refund.

In fact, if you file for bankruptcy prior to filing your 2025 tax return, your right to a tax refund could become part of the bankruptcy estate. Despite the fact that you have not yet received the refund, bankruptcy law will view it as a potential asset, based on the income you have already earned. This is a definite surprise to most people who assume that, since they have not yet received the refund, it is "safe."

What Happens to a Tax Refund in Bankruptcy?

Whether you are allowed to keep your tax refund once you file for bankruptcy depends on the following:

• The type of bankruptcy you file
• The amount of the refund
• Whether the refund is tied to pre-filing income
• Whether exemptions apply

Texas has generous exemption laws to protect wages and certain assets, but tax refunds are not automatically exempt. Strategic timing – like waiting until after the refund is received and lawfully spent can sometimes preserve funds that would otherwise be lost.

Chapter 7 Versus Chapter 13 as They Apply to 2026 Tax Filing

Under Chapter 7 bankruptcy, refunds attributable to income earned before filing may be taken by the trustee. Non-exempt refunds can be used to pay creditors, so filing too early can increase the risk of losing a refund. Under Chapter 13, refunds are often treated as disposable income. Because of this, the courts may require refunds to be turned over to help fund the repayment plan, although some plans allow debtors to retain refunds for necessary expenses when properly disclosed.

Can Bankruptcy Eliminate Tax Debt?

Some federal income tax debts can be discharged in bankruptcy, but only if the following criteria are met:

• The tax return was due at least three years ago.
• The return was filed at least two years ago.
• The tax was assessed at least 240 days ago
• No fraud or willful evasion is involved.

Taxes from 2025 are almost never dischargeable in an early 2026 filing, although bankruptcy can stop collection efforts and create structured repayment options.

Contact a Dallas, TX Bankruptcy Attorney

If you are considering filing for bankruptcy, you must speak to a skilled Fort Worth, TX Chapter 7 bankruptcy attorney from Acker Warren P.C.. Our firm will evaluate your tax situation, refund exposure, and debt structure before you file so that you can make the most informed decision possible. We can generally complete a bankruptcy case with a fast turnaround. To schedule your free consultation, call 817-752-9033.