IRS guidance for Trump's 'no tax on tips' and overtime deductions: What to know
Workers can deduct up to $25K in tips and over $12K in overtime pay under new tax law provisions
By Eric Revell FOXBusiness
The new year will bring a host of tax benefits that Americans can take advantage of when filing their taxes in a few weeks.
The IRS released its guidance for the "no tax on tips" and "no tax on overtime" provisions of the One Big Beautiful Bill Act (OBBBA), for workers who can claim the deductions for the 2025 tax year.
President Donald Trump signed the OBBBA into law in July after Republican majorities in Congress passed the tax reform and spending bill on a party-line vote this summer.
The law included "no tax on tips" and "no tax on overtime," and the Treasury Department and IRS are now providing guidance as the law directed to help workers determine their deductions.
The IRS notice said that taxpayers who are eligible to claim the tipped and overtime income deductions may have to determine those amounts separately this year as Form W-2 and Form 1099 won't be updated to include income from tips and overtime for the 2025 tax year.
Taxpayers may review examples in the IRS guidance that illustrate how the tipped income and overtime deductions work based on the relevant reported or unreported income they received.
Under the OBBBA, workers who receive qualified tips can deduct up to an annual maximum of $25,000 and the deduction phases out for taxpayers with a modified adjusted gross income over $150,000 (or $300,000 for joint filers).
The IRS estimates there are about 6 million workers who report tipped wages, and the tipped income deduction is in effect for tax years 2025 to 2028.
more
https://www.foxbusiness.com/economy/irs-releases-guidance-trumps-no-tax-tips-overtime-deductions-what-know
