Overview

• A draft IRS Schedule 1-A shows the tip deduction capped at $25,000 on joint returns, unlike the overtime deduction section that explicitly doubles for married filers.
• Nevada’s Democratic delegation urged Treasury and the IRS to apply a $25,000 limit per individual on joint returns to avoid a marriage penalty.
• The temporary deduction lets eligible workers exclude up to $25,000 of qualified tips from taxable income for 2025 through 2028, with phaseouts starting at $150,000 MAGI ($300,000 for joint filers).
• Treasury released a preliminary list of 68 occupations that customarily receive tips, but final eligibility could shift, especially for self-employed workers in specified service trades or those lacking Social Security numbers.
• Advisers caution against major planning moves until rules arrive, noting the deduction lowers taxable income but not payroll or self-employment taxes and does not reduce adjusted gross income.