IRS Announces 2025 Tax Deductions for Tips and Overtime

The IRS has announced new tax deductions for workers who receive tips and overtime pay.

For the tax years 2025 through 2028, workers can deduct up to $25,000 in tips and up to $12,500 in overtime pay from their taxes.

These deductions phase out for higher-income taxpayers.

The IRS has also set the dates for the 2026 filing season, starting on January 26, 2026, with a deadline of April 15, 2026.

Workers can use the new Schedule 1-A to claim these deductions.

The IRS Free File program will start accepting returns on January 9, 2026, and the fillable forms will be available starting January 26, 2026.