No Tax On Tips and Overtime? Well Kind of…
The President campaigned on “no tax on tips” and “no tax on overtime” but getting it through Congress is easier said then done.
What we ended up with is a temporary tax deduction for both.
California, as of yet, has not decided if they will follow the federal law.
Both deductions will expire at the end of 2028.
The tip deduction applies to workers making less than $150,000.
It phases out for incomes above this if single and $300,000 for couples.
There is a deductible cap of $25,000 per year.
The overtime pay deduction applies to workers making less than $150,000 per year with phase outs.
The deduction cap is $12,500 for singles and $25,000 for couples.