0326 Publ 6133 (PDF) — verbatim text

Official source: IRS Forms, Instructions & Publications (https://www.irs.gov/pub/irs-pdf/p6133.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

Under the One, Big, Beautiful Bill, some taxpayers that receive tips and overtime pay may be eligible for new deductions for tax years 2025 through 2028.

No tax on tips deduction No tax on overtime deduction
Who qualifies
Eligible tipped workers who: Taxpayers who:
» Receive tips in an occupation that customarily and » Have a Social Security number (SSN) valid
regularly received tips on or before December 31, 2024 for employment
» Have a Social Security number (SSN) valid for employment » If married, file a joint return
» If married, file a joint return
What can be deducted
Generally, qualified tips are cash or charged tips, including Individuals may deduct the overtime paid to them as
shared tips, that are paid voluntarily, not subject to negotiation, required under section 7 of the Fair Labor Standards Act of
and determined by the customer. Tips received while performing 1938 that is more than their regular rate of pay (generally,
services that are felonies or misdemeanors, or for prostitution the “half” portion of “time-and-a-half”). Amounts that are not
or pornographic activity are not qualified tips. There are required by section 7 of the FLSA (e.g., due to state law or
other restrictions that may apply to your situation. For more union contract) are not deductible.
information see https://www.govinfo.gov/content/pkg/FR-2025
09-22/pdf/2025-18278.pdf.
Maximum annual deduction
$25,000 (Additional limits may apply for tips received by $12,500 ($25,000 for joint filers.)
self-employed individuals.)
Phaseout amounts

Phases out for taxpayers with modifed adjusted gross income over $150,000 ($300,000 for joint flers.)	Phases out for taxpayers with modifed adjusted gross income over $150,000 ($300,000 for joint flers.)
How amounts are reported to taxpayer~~s ~~
Qualifed tips must be reported on a Form W-2, Form 1099 NEC, Form 1099-MISC, or Form 1099-K or on Form 4137 if the individual directly reports the tips as an employee. However, a transition rule applies for tax year 2025 and these amounts may not be separately stated. See Notice 2025-69 or the Instructions for Form 1040for guidance on how to determine the amount for tax year 2025.	Qualifed overtime must be reported on Form W-2, Form 1099-NEC, or Form 1099-MISC. However, a transition rule applies for tax year 2025 and these amounts may not be separately stated. See Notice 2025-69 and the Instructions for Form 1040 for guidance on how to determine the amount for tax year 2025.
How taxpayers can claim the deductio~~n ~~
On Form 1040, Schedule 1-A, Additional Deductions, Part II	On Form 1040, Schedule 1-A, Additional Deductions, Part III
When the deduction can be claime~~d ~~
Only for tax years 2025 through 2028	Only for tax years 2025 through 2028

For more information and additional details on eligibility requirements, refer to the One, Big, Beautiful Bill provisions page on IRS.gov and the Instructions for Form 1040.

Publication 6133 (3-2026) Catalog Number 96085V Department of the Treasury Internal Revenue Service www.irs.gov