Ginti US

No Tax on Tips & Overtime Calculator

Enter your tips, overtime premium and income to see the deductions on Schedule 1-A and how much federal income tax they save.

Filing status

Modified adjusted gross income ($)

For most people this is the adjusted gross income on Form 1040, line 11.Qualified tips this year ($)

Overtime premium this year ($)

Only the extra half in time-and-a-half that the FLSA requires, not the whole overtime pay.

Federal income tax saved

$1,920

On $16,000 of new deductions, mostly at your 12% rate

Tips deduction: $12,000
Overtime deduction: $4,000
Tips cap: $25,000
Overtime cap: $12,500

The deductions cover federal income tax only: Social Security, Medicare and state tax still apply. They run for 2025 to 2028, are claimed on Schedule 1-A whether or not you itemize, need a valid Social Security number, and married couples must file jointly. Tips must come from an occupation on the IRS list of tipped jobs.

What you entered

Status: singleMAGI: $65,000Tips: $12,000Overtime premium: $4,000

1
Qualified tips, up to the $25,000 cap
smaller of $12,000 and $25,000= $12,000
2
Deduction
$12,000= $12,000
3
Overtime premium (the half in time-and-a-half), up to the $12,500 cap
smaller of $4,000 and $12,500= $4,000
4
Deduction
$4,000= $4,000
5
Federal income tax before the deductions (standard deduction only)
tax on $65,000 − $16,100= $5,620
6
Federal income tax saved
tax on $48,900 − tax on $32,900= $1,920

Result

Tax saved: $1,920

Figures are for tax year 2026, filed in early 2027, using the 2026 brackets and standard deduction. The phase-out follows Schedule 1-A: $100 off for every full $1,000 of MAGI over the threshold.

Tips and overtime deductions in 2026: worked examples

Each row is the deduction on Schedule 1-A and the federal income tax it saves, with the standard deduction and no other deductions.

Filing status	Tips	Overtime premium	MAGI	Deduction	Tax saved
Single	$12,000	$0	$60,000	$12,000	$1,440
Single	$25,000	$0	$165,500	$23,500	$5,640
Single	$0	$8,000	$80,000	$8,000	$1,760
Married filing jointly	$0	$20,000	$180,000	$20,000	$4,400

The second row loses $1,500 to the phase-out: $100 for each full $1,000 of MAGI over $150,000. The overtime figure is the premium only, the extra half in time-and-a-half. Social Security and Medicare tax still apply to all of it.

What "no tax on tips" really means

For 2025 to 2028 you can deduct up to $25,000 of qualified tips and up to $12,500 of qualified overtime pay ($25,000 on a joint return) from your federal taxable income, on the new Schedule 1-A, whether or not you itemize. The tips must come from a job on the IRS list of tipped occupations. Both deductions shrink by $100 for every full $1,000 of modified AGI over $150,000 ($300,000 joint). They cover federal income tax only: Social Security, Medicare and state income tax are still due on the same money.

Only the premium half of overtime counts

The overtime deduction covers the extra half of time-and-a-half that the Fair Labor Standards Act requires, not the whole overtime paycheck. At $30 an hour, 200 overtime hours pay $9,000, but only 200 x $15 = $3,000 is the premium you can deduct. Overtime paid only because of a state law or a contract, beyond what the FLSA requires, doesn't count. From 2026, employers report qualified overtime separately on Form W-2.

Frequently asked questions

How much tax will I save on my tips?

Your tips deduction times your top tax rate, roughly. A single filer with $12,000 of tips and $60,000 of MAGI deducts all $12,000 and saves about $1,440 of federal income tax in 2026, at 12%. Someone with $25,000 of tips and $165,500 of MAGI loses $1,500 of the deduction to the phase-out and saves about $5,640.

Are tips now completely tax-free?

No. The deduction removes up to $25,000 of tips from federal income tax, but Social Security and Medicare taxes still apply, and most states still tax tips. Tips above $25,000, or from an occupation not on the IRS list, are taxed as before.

Who can claim the tips and overtime deductions?

Anyone with qualified tips or FLSA overtime and a valid Social Security number, for tax years 2025 to 2028. Married couples must file jointly. Self-employed people can claim the tips deduction too, up to their net profit from the business, except in specified service businesses such as law, health and consulting.

Does the deduction phase out?

Yes. Each deduction falls by $100 for every full $1,000 of modified AGI over $150,000, or $300,000 for a joint return. With $165,500 of MAGI a single filer loses $1,500 of each; the $25,000 tips deduction is gone at $400,000.