💵 No tax on tips
Deduct up to $25,000 of qualified tips if your job is on the Treasury list of tipped occupations.
$25,000 per return (single or joint) · phase-out: over $150,000 ($300,000 joint)
Rules last checked Oct 22, 2026 · tax years 2025 to 2028
The new federal tax breaks, checked in plain English.
No tax on tips, no tax on overtime, the car loan interest deduction, and the extra senior deduction. See who each one covers, the income limits, and how to claim it, with a link to the official IRS source on every page.
Not tax advice. TaxBreakChecker explains the official IRS rules in plain English. It is not affiliated with the IRS or any government agency. Confirm with a tax professional or your tax software.
The four new deductions
⏱️ No tax on overtime
Deduct the extra "half" of time-and-a-half overtime pay, up to $12,500 ($25,000 joint).
$12,500 ($25,000 on a joint return) · phase-out: over $150,000 ($300,000 joint)
🚗 Car loan interest deduction
Deduct up to $10,000 a year of interest on a loan for a new, U.S.-assembled personal vehicle.
$10,000 of interest per return, per year · phase-out: over $100,000 ($200,000 joint)
👵 Extra senior deduction
An extra $6,000 deduction for each person 65 or older, on top of the usual senior standard deduction.
$6,000 per eligible person ($12,000 if both spouses qualify) · phase-out: over $75,000 ($150,000 joint)
At a glance
| Deduction | Maximum | Phase-out starts (MAGI) |
|---|---|---|
| No tax on tips | $25,000 per return (single or joint) | $150,000 ($300,000 joint) |
| No tax on overtime | $12,500 ($25,000 on a joint return) | $150,000 ($300,000 joint) |
| Car loan interest deduction | $10,000 of interest per return, per year | $100,000 ($200,000 joint) |
| Extra senior deduction | $6,000 per eligible person ($12,000 if both spouses qualify) | $75,000 ($150,000 joint) |
All four are claimed on Schedule 1-A and work whether you itemize or not. Figures from IRS Fact Sheet FS-2025-03 and the IRS draft 2026 Schedule 1-A.
🔎 Is your job on the tips list?
Search all 71 jobs on the Treasury list of tipped occupations, from bartenders to rideshare drivers.
🇺🇸 Was your car assembled in the U.S.?
Look up a VIN with free NHTSA data to see the plant where the vehicle was built.
Getting ready for your 2026 return
- 2026 W-2s have new boxes: cash tips (box 12, code TP), qualified overtime (box 12, code TT) and your tipped occupation code (box 14b).
- Car lenders report interest on the new Form 1098-VLI.
- Married couples must file jointly to claim the tips, overtime and senior deductions.
- Keep tip logs, pay stubs, loan statements and your window sticker.
Common questions
What are the new tax deductions for 2025 to 2028?
The 2025 tax law (Public Law 119-21, often called the One Big Beautiful Bill Act) added four federal deductions for tax years 2025 through 2028: qualified tips, qualified overtime pay, interest on loans for new U.S.-assembled vehicles, and an extra $6,000 for people 65 and older.
Do I need to itemize to get these deductions?
No. The IRS says all four are available whether you itemize or take the standard deduction. They are claimed on Schedule 1-A of Form 1040.
Can I claim more than one?
Yes. If you meet the rules for more than one, Schedule 1-A adds them together. Each one has its own cap and income phase-out.
Is TaxBreakChecker from the IRS?
No. TaxBreakChecker is an independent, free resource and is not affiliated with the IRS. We link to the official IRS pages so you can check every rule yourself.