01/16/2026
๐จ Heads up! New Tax Breaks for Overtime & Tips Starting with 2025 Taxes ๐จ
If you worked overtime or earned tips in 2025, you might see more money in your pocket when you file your 2025 tax return (in 2026)! Hereโs whatโs changing under the new federal tax law known as the One Big Beautiful Bill Act:
๐ผ No Tax on Overtime (Sort Of)
โข You can deduct up to $12,500 of qualified overtime pay from your federal taxable income โ and up to $25,000 if youโre married filing jointly. ๏ฟผ
โข This isnโt a total exemption โ itโs a deduction that lowers your taxable income before taxes are calculated. ๏ฟผ
โข Payroll taxes like Social Security and Medicare still apply. ๏ฟผ
๐ต No Tax on Tips (Sort Of)
โข If youโre in a job where tips are customary (servers, bartenders, etc.), you can deduct up to $25,000 of qualified tips on your federal return. ๏ฟผ
โข The deduction phases out if your income is above certain thresholds (starts reducing above about $150k individual / $300k jointly). ๏ฟผ
โข You must still report tips โ and Social Security & Medicare taxes still apply. ๏ฟผ
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Important Details:
โข These deductions are in effect for tax years 2025 through 2028. ๏ฟผ
โข They lower your taxable income โ which could mean a bigger refund or lower taxes owed. ๏ฟผ
โข States may or may not follow the federal rule, so your state taxes could be different. ๏ฟผ
๐ Schedule your tax appointment today and let us maximize your return with confidence.
๐ 361-213-3530
๐ Www.accounting.com
๐ 108 N Texana St, Hallettsville, TX 77964
