A tax year is the annual period used for keeping tax records and reporting income. For individual taxpayers, the tax year is the same as the calendar year (from January 1st to December 31st). Most businesses also use the calendar year.
However, a business can alternatively choose a fiscal year as its tax year. A fiscal year is any 12-month period that ends on the last day of any month other than December. There are some instances, such as seasonal businesses, where it may make sense for a business to choose a fiscal year instead of a calendar year.