2026 tax year · Schedule 1-A

Tips and overtime deduction

Estimate the federal deductions for qualified tips and qualified overtime compensation. These deductions exist for tax years 2025 through 2028.

Voluntary cash or charged tips, including shared tips, in a qualifying occupation, reported as the IRS requires.
Generally the extra half of FLSA time-and-a-half, not the whole overtime paycheck. State or contract overtime that is not required by the FLSA does not count.
The tip deduction cannot exceed net income from the trade or business where the tips were earned.
General education, not personal tax advice. This estimate is for learning only. Eligibility depends on occupation, reporting, and a valid Social Security number.
Assumptions.
  • Maximum tip deduction is $25,000 per return. Maximum overtime deduction is $12,500, or $25,000 on a joint return.
  • Each deduction is reduced by $100 for each full $1,000 of modified AGI over $150,000 ($300,000 if you file jointly), and not below zero. A partial $1,000 is dropped, as on 2026 Schedule 1-A.
  • If you are married, you must file jointly to claim these deductions. Married filing separately is treated as ineligible.
  • Qualified overtime is the FLSA premium, generally the "half" of time-and-a-half. Auto-gratuities may not be qualified tips.
  • This tool does not check the IRS tipped-occupation list, SSTB limits for certain self-employed tip claimants, or whether your pay was properly reported.
IRS sources.

Watch: No Tax on Tips and Overtime

General education, not personal tax advice