No Tax on Tips & Overtime Calculator
See how much of your tips and overtime pay you can deduct under the One Big Beautiful Bill Act for 2026, and roughly how much federal income tax it saves.
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Including your tips and overtime pay
Only the extra half of time-and-a-half
Advanced optionsTax year, deductions and other settings (sensible defaults already applied)
Married couples must file jointly to claim either deduction. Both need a valid Social Security number.
Your new deductions
Deduct $8,000 · saves about $960 in federal tax
Tips $8,000 (max $25,000) · Overtime $0 (max $12,500)
Full breakdownTables, chart and tax-saving tips
Both deductions come off your taxable income whether you itemize or take the $16,100 standard deduction. They don't reduce Social Security, Medicare or (in most states) state income tax.
Each one shrinks by $100 for every full $1,000 of modified adjusted gross income above $150,000. Your income is below that line, so you get the full amounts.
The saving is worked out on your taxable income after the standard deduction ($38,900), at 2026 federal rates.
FAQ
Frequently asked questions
How much tips can I deduct?
Up to $25,000 a year of qualified tips received in an occupation on the IRS list of tipped occupations. The limit shrinks by $100 for every full $1,000 of modified adjusted gross income above $150,000 ($300,000 if married filing jointly).
Which part of overtime is deductible?
Only the premium: the part above your regular rate. If you earn $20 an hour and get $30 for overtime, $10 of each overtime hour counts. The deduction is capped at $12,500 ($25,000 for joint filers) and phases out like the tips deduction.
Do these deductions lower Social Security and Medicare?
No. They reduce federal income tax only. Social Security and Medicare are still due on tips and overtime, and most states still tax them.
Which years do the deductions cover?
They apply to tax years 2025 through 2028. You claim them on Schedule 1-A with Form 1040, whether or not you itemize.
Keep calculating
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