Resources and New Tax Changes

No Tax on Overtime.
Who qualifies and how to claim it.

To claim this tax break

The No Tax on Overtime tax break only applies to non-exempt employees who work FLSA (Fair Labor Standards Act) qualified overtime. If you are uncertain if you qualify, contact your employers Human Resources Department for clarification.
Overtime must be reported on form W2 or taxpayer must have their last pay stub of 2025 showing the amount paid for premium overtime. Taxpayers can also furnish a letter from their employer on official letterhead outlining the overtime premium if the paystub is unavailable.
No tax on overtime does not apply to shift differentials, weekend premiums, or other pay differentials. Only the premium portion of overtime pay which is the "half" of time-and-a-half pay.
The maximum deduction for single taxpayers is $12,500 or $25,000 for married filing joint.
Married filing separately filers do not qualify to this tax break.
This tax break phases out for single filers who have a modified adjusted gross income over $150,000 or $300,000 for joint filers.

To claim this tax break

Tipped workers may be eligible to deduct up to $25,000 of qualified tips for industries that traditionally and regularly receive tips.
- Restaurants and Food Service
- Hospitality
- Personal Services
- Entertainment
- Transportation
Tips must be given voluntarily, tips that are added to bills involuntarily are considered service charges and do not qualify.
Tips must have ABSOLUTE PROOF to be used for the deduction.
- Electronic tips can be proven by showing the service amount and then the tipped amount on the payment platform.
- Cash tips must have a tip log that shows date, service, and tip that align with a schedule.
- Payment platform statements that outline the total of tipped income.
Employees tipped on a W2 can use IRS form 4070 A to keep track of cash tips daily.
Cash tips are considered wages and are subject to FICA tax and will be reported on IRS form 4137 on the tax return.
Tip deduction phases out for single filers earning over $150,000 and $300,000 for joint filers.
Married filing Separate do not qualify for this tax break.