07/03/2025
One Big Beautiful Bill Act (OB3):
Tips-the Server declares all income and pays Social Security/Medicare taxes (as usual) on all income. When they have their taxes prepared, they are allowed a deduction from taxable income (after Adjusted gross income "below the line") of up to $25k of income that was from customary tipping occupations. Limitations start at $150k/$300k-joint AGI.
OT-the employee declares all income and pays Social Security/Medicare taxes (as usual) on all income. When they have their taxes prepared, they are allowed a deduction from taxable income (after Adjusted gross income "below the line") of up to $12,500 of income ($25k on joint return) that was from Qualified OT compensation. This income is only the Differential Rate income (just the "half" of "time and half"-not the entire hourly rate). Limitations start at $150k/$300k-joint AGI.
Social Security-Social Security Income is taxed as usual on a return! The Personal Exemption is increased by $6,000 for each person over the age of 65. Limitations start at $75,000 ($150k for Joint). The $6k does not appear to apply to Disability Income, just over 65 Seniors.