The Department of the Treasury and the Internal Revenue Service (IRS) issued guidance detailing how employees can calculate tax deduction amounts applicable to tips and overtime pay when submitting federal returns, the IRS said in a Nov. 21 statement.
The agency is in the process of updating income tax forms after President Donald Trump signed into law the One Big Beautiful Bill Act in July, which gave taxpayers certain provisions to claim such deductions.
Under the bill, workers may be eligible for new deductions for tax years 2025 through 2028 if they received qualified tips, with the maximum annual deduction being $25,000. This amount phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)….