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No Tax on Tips and Overtime: Years 2025 to 2028
Educational information only. Not tax advice. Not affiliated with the IRS. Last checked against IRS pages: October 17, 2026. Examples use made-up numbers. Anything marked expected should be re-checked.
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Short answer: The IRS fact sheet FS-2025-03 says the deductions for qualified tips and qualified overtime are effective for 2025 through 2028; the IRS tipped-occupations material likewise refers to tax years 2025 through 2028. That's what the law as described by the IRS provides today. Whether anything is extended or changed after 2028 is not something we can state.
Key limits (IRS fact sheet)
| Tips | Overtime | |
|---|---|---|
| Maximum annual deduction | $25,000 (self-employed: limited to net income from the trade or business where tips were earned) | $12,500 ($25,000 joint) |
| Phase-out | MAGI over $150,000 ($300,000 joint) | same |
| Itemizing needed? | No | No |
| Other conditions | SSN on the return; married couples file jointly; tips: certain SSTBs excluded | SSN and joint filing for married couples |
Planning dates (expected)
- 2026 forms: W-2s expected by February 1, 2027 (page).
- 2026 return: expected due April 15, 2027 (page).
- 2027 and 2028 returns: same deduction years on the IRS fact sheet; reporting forms may change.
FAQ
Is it permanent? The IRS describes it as effective for 2025 through 2028.
Do I need to itemize? No, per the IRS fact sheet.
What we could not verify
- Any legislation after July 2025 that could change the years (not researched).
- Form changes for 2027 and 2028.
Sources (official)
- IRS, FS-2025-03 — https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors (read October 17, 2026)
- IRS, Topic no. 761, Tips: withholding and reporting (reviewed October 12, 2026) — https://www.irs.gov/taxtopics/tc761 (read October 17, 2026)
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Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. See the disclosure.