{
  "name": "No tax on tips and overtime: key figures",
  "publisher": "WattFlow",
  "url": "https://tax.wattflow.net/no-tax-on-tips-and-overtime-2026-numbers/",
  "checked": "2026-11-10",
  "tax_years": "2025-2028",
  "tips": {
    "cap_per_return": 25000,
    "cap_married_filing_jointly": 25000,
    "form": "Schedule 1-A, Part II",
    "w2": "Box 12 code TP; occupation code in box 14b"
  },
  "overtime": {
    "cap": 12500,
    "cap_married_filing_jointly": 25000,
    "qualifying_part": "FLSA-required premium (0.5 × regular rate)",
    "form": "Schedule 1-A, Part III",
    "w2": "Box 12 code TT (required from 2026)"
  },
  "phase_out": {
    "threshold": 150000,
    "threshold_married_filing_jointly": 300000,
    "reduction": "$100 for each full $1,000 of modified AGI over the threshold, for each deduction separately"
  },
  "not_reduced": [
    "Social Security tax",
    "Medicare tax",
    "self-employment tax",
    "most state income taxes"
  ],
  "married_filing_separately": "not allowed",
  "federal_2026": {
    "standard_deduction": {
      "mfj": 32200,
      "qss": 32200,
      "hoh": 24150,
      "single": 16100,
      "mfs": 16100
    },
    "brackets": {
      "mfj": [
        [
          0,
          0.1
        ],
        [
          24800,
          0.12
        ],
        [
          100800,
          0.22
        ],
        [
          211400,
          0.24
        ],
        [
          403550,
          0.32
        ],
        [
          512450,
          0.35
        ],
        [
          768700,
          0.37
        ]
      ],
      "hoh": [
        [
          0,
          0.1
        ],
        [
          17700,
          0.12
        ],
        [
          67450,
          0.22
        ],
        [
          105700,
          0.24
        ],
        [
          201750,
          0.32
        ],
        [
          256200,
          0.35
        ],
        [
          640600,
          0.37
        ]
      ],
      "single": [
        [
          0,
          0.1
        ],
        [
          12400,
          0.12
        ],
        [
          50400,
          0.22
        ],
        [
          105700,
          0.24
        ],
        [
          201775,
          0.32
        ],
        [
          256225,
          0.35
        ],
        [
          640600,
          0.37
        ]
      ]
    }
  },
  "sources": [
    {
      "title": "IRS — Schedule 1-A (Form 1040), Additional Deductions",
      "url": "https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf"
    },
    {
      "title": "IRS FS-2026-13 — Questions and answers about the deduction for qualified overtime compensation",
      "url": "https://www.irs.gov/pub/taxpros/fs-2026-13.pdf"
    },
    {
      "title": "IRS — General Instructions for Forms W-2 and W-3 (2026)",
      "url": "https://www.irs.gov/instructions/iw2w3"
    },
    {
      "title": "IRS Rev. Proc. 2025-32 — 2026 tax rate tables and standard deduction",
      "url": "https://www.irs.gov/pub/irs-drop/rp-25-32.pdf"
    },
    {
      "title": "IRS — Occupations that customarily and regularly received tips (IRS.gov/TippedOccupations)",
      "url": "https://www.irs.gov/forms-pubs/occupations-that-customarily-and-regularly-received-tips-on-or-before-dec-31-2024"
    }
  ]
}