New Tax Deductions for Tips & Overtime

0:00Hey, it's Corey with Derm News Today, Your City, Your News, Every Day. Tax season is wrapping up fast, with the Federal filing deadline set for Wednesday, April 15. This year brings fresh deductions for qualified tips and overtime pay, aimed at helping workers and service jobs and beyond. These breaks apply to tax years from 2025 through 2028, but filers need a valid social security number on their return. The no-tax on-tips deduction lets you subtract up to $25,000 in eligible tips each year. For overtime, you can deduct up to $12,500, but only the premium portion above your regular rate. Think time and a half pay, if your normal wage is $10 an hour, just that extra $5 per overtime hour qualifies. Experts like IRS agents point out these perks, especially help servers and restaurant staff who rely on tips. To claim overtime, check box 14 or the other category on your W2 for codes like OB,

1:01B, B, OT, premium, or dig into your final year end pay stub for the breakdown. Other federal updates include bigger breaks for seniors, more room for charitable gifts, and deductions on car loan interest starting in 20, 26. Keep in mind, these federal changes do not carry over to North Carolina state returns. State lawmakers must update their rules separately, with the last tweak back on January 1, 2023. Officials urge everyone to file on time and go electronic to avoid headaches by April 15. The Daily News Now is powered by our sponsor. When you need a moment alone, just lay back and listen.