"Workers who reported tips on their 2025 W-2 will be able to deduct up to $25,000 in qualified tips, Brown said. The IRS defines qualified tips are voluntary cash or charged tips received from customers or through tip sharing. Examples of people who might qualify for the deduction include wait staff, bartenders, salon workers, personal trainers and gig economy workers."
"The big four changes affect taxes on tips, taxes on overtime, a new senior deduction and a higher cap on deductible state and local taxes, said Jill Brown, a tax preparer at Keegan's Tax & Financial Services who has been doing tax returns in Vallejo for 31 years. One important thing to remember about these new developments: they don't apply to everyone, and different people may be affected differently, said Brown. Many of the provisions involve income limits, for example."
Several federal tax changes effective this year affect taxes on tips, overtime wages, a new senior deduction, and the deductible state and local tax cap. Workers who reported tips on their 2025 W-2 may deduct up to $25,000 in qualified tips, with the deduction phasing out above $150,000 ($300,000 married) and expiring Dec. 31, 2028; a Social Security number is required. A new overtime wage deduction of up to $12,500 ($25,000 married) also phases out above $150,000 and ends in 2028, with restrictions that largely limit benefits to hourly workers. Many provisions include income limits and do not affect California state taxes.
Read at www.timesheraldonline.com
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