Overview

• President Trump signed the One Big Beautiful Bill into law on July 4, delivering above-the-line tax relief for tipped and overtime workers.
• For tax years 2025 through 2028, workers can deduct up to $25,000 in qualified tips or $12,500 in overtime pay on their federal returns.
• Single filers earning up to $150,000 and joint filers up to $300,000 qualify for full deductions with gradual phase-outs for higher incomes.
• The Republican-backed package also extends 2017 tax cuts while offsetting costs through cuts to Medicaid and SNAP and new border security funding.
• The Treasury Department and IRS are expected to issue rules before the 2025 filing season to clarify qualifying occupations, income caps and reporting requirements.