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Tips and overtime deduction calculator (2026): no tax on tips, no tax on overtime

Enter your filing status, income (MAGI), qualified tips and qualified overtime premium pay, and whether you meet the occupation and FLSA rules. See your tips deduction, overtime deduction and combined total for 2025–2028 under the new federal deductions — before the income phase-out and after it.

✓ Checked26 U.S.C. §§224–225 and the 2025 Schedule 1-A worksheet, Parts II and III
Combined tips + overtime deduction–
Tips deduction (of , capped at $25,000)
Overtime deduction (of , capped at )
Combined deduction
MAGI phase-out threshold (same for both)
Reduction applied (per $1,000 of MAGI over the threshold, rounded down)

This is a deduction, not a credit: it lowers your taxable income, not your tax bill dollar for dollar, and it doesn't reduce Social Security or Medicare tax. See what it's actually worth in tax dollars in the 2026 income tax calculator (enter your income there as MAGI minus the deduction shown above). 2025–2028 only, fixed dollar amounts (26 U.S.C. §§224–225, no inflation adjustment in the statute); married filing separately can't claim either deduction; a valid Social Security number is required. Full mechanics and worked examples: the tips and overtime guide. Not tax advice.

How it works

Two OBBBA deductions for tax years 2025-2028: up to $25,000 of qualified tips (26 U.S.C. §224) and up to $12,500 ($25,000 joint) of the FLSA "half" overtime premium (§225), above the line whether or not you itemize. Both phase out $100 per full $1,000 of MAGI over $150,000 ($300,000 joint) -- the Schedule 1-A worksheet rounds the excess down to a whole $1,000 step before applying the cut. Tips need an occupation on Treasury's tipped-occupation list and a non-SSTB employer; overtime needs FLSA non-exempt status. Married filing separately gets neither, regardless of income. More in the tips and overtime guide, including five worked examples and the rounding rule most explainers get wrong.

Worked examples