Eligible workers can claim new federal income tax deductions on their 2025 returns for qualified tip income (up to $25,000) and qualified overtime premiums (up to $12,500, or $25,000 for joint filers). You don’t need to itemize to claim these breaks, but complex rules and restrictions apply. Both deductions begin phasing out when your modified adjusted gross income exceeds $150,000 ($300,000 for joint filers). Tips qualify only in IRS-designated tipped occupations, and overtime generally must be required under the Fair Labor Standards Act. Because 2025 W-2 and 1099 forms typically won’t show these amounts, you may need to crunch some numbers. Contact us for assistance and more details.
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