Effective Date: Applies to taxable years beginning after Dec. 31, 2024, and before Jan. 1, 2029.
Creates deduction of up to $25,000 for qualified tips for individuals in traditionally and customarily tipped industries. Expires December 31, 2028.
Excludes highly compensated employees by phasing out deduction for joint filers with AGI over $300,000 ($150,000 for others).
Extends FICA tax tip credit to tips received in connection with food service and beauty and barber services. Does not require a spouse’s Social Security number.
Deduction available to both itemizers and non-itemizers.
Deduction on Overtime Pay
Effective Date: Applies to taxable years beginning after Dec. 31. 2024, and before Jan. 1, 2029.
Creates deduction for qualified overtime compensation (not including qualified tips), excluding highly compensated employees, for taxable years 2025 through 2028.
Limits deduction to $12,500 of qualified overtime income ($25,000 for joint returns).
Deduction available to itemizers and non-itemizers.