Workers who received tips or overtime will be able to deduct this compensation when filing their 2025 income taxes.
The Internal Revenue Service (IRS) has released guidance on its “no tax on tips” and “no tax on overtime” provisions under the One Big Beautiful Bill Act (OBBBA). The OBBBA was signed into law in July of this year by President Trump and includes sections that have created additional deductions that workers can claim in 2025 if they were receiving compensation via tips or overtime work. The guidance released by the IRS will help these workers determine what their deductions can be.
According to the IRS, taxpayers who will be eligible to claim the new tipped and overtime deductions will likely have to determine the amounts separately, as W-2 and 1099 Forms will not be updated to include the information for 2025. Workers who receive tips that qualify will be able to deduct a maximum of $25,000, and workers who received overtime will be able to deduct up to $12,500.
The IRS stated that it is still in the process of updating income tax forms, as well as instructions that taxpayers can use to assist them in claiming these deductions for this upcoming filing season.
As the Lord Leads, Pray with Us…
- For officials in the IRS as they work to update forms and instructions for taxpayers
- For President Trump as he oversees the implementation of the One Big Beautiful Bill Act
- For Treasury Secretary Bessent as he facilitates the incorporation of new tax provisions into the system as acting IRS commissioner.
Sources: Fox Business, MSN
