Feature Articles
Can You Claim a Tax Deduction for Tips or Overtime Income?
New tax provisions provide eligible taxpayers deductions on qualified tips and overtime earnings without requiring itemization:
Deducting Tips
Taxpayers working in customary service occupations (hospitality, food service, delivery, and personal wellness) can deduct up to $25,000 in qualified tips. The deduction begins phasing out at MAGIs of $150,000 ($300,000 joint) and fully phases out at $400,000 ($550,000 joint).
Deducting Overtime
Eligible workers can deduct up to $12,500 of FLSA-mandated overtime premium pay ($25,000 for joint returns). Note that federal payroll taxes still apply to both tips and overtime income.
Act Soon to Take Advantage of Clean Energy Tax Incentives
The Section 179D commercial building energy efficiency deduction provides accelerated deductions for interior lighting, HVAC, and building envelope retrofits achieving at least a 25% energy savings benchmark, provided construction commences prior to statutory sunset dates.
Make Smart Choices With a Sudden Windfall
Whether from inheritance, legal settlement, or equity liquidity events, establishing a short-term cash buffer before committing to large lifestyle or investment expenditures prevents unexpected tax traps.
Tax Tips
- 2026 Individual Tax Law Adjustments: Review standard deduction inflation increases and adjusted federal tax brackets for 2026.
- Heavy Vehicle Tax Breaks: Section 179 expensing remains available for qualifying business SUVs and trucks with a Gross Vehicle Weight Rating (GVWR) exceeding 6,000 lbs.
- Casualty Loss Deductions: Re-examine relaxed casualty loss rules for federally declared disaster areas.
