New U.S. Tax Law Allows Deductions for Tips and Overtime Pay
The “One Big Beautiful Bill Act,” signed by U.S. President Donald Trump, introduces tax deductions of up to $25,000 for tips and over $12,000 for overtime earnings.
Summary
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Terms & Concepts
Tax deduction: An amount that can be subtracted from taxable income, reducing the total amount of tax owed.
Overtime pay: Compensation for hours worked beyond the standard workweek, typically at a higher rate.
Tips income: Earnings received as gratuities from customers, often in the service industry.