About this tool
The 2025 tax law added four temporary deductions for tax years 2025 to 2028. They are claimed on Schedule 1-A and can be taken whether or not you itemize:
- Tips: up to $25,000 of qualified tips for workers in occupations that customarily received tips. It falls by $100 for every $1,000 of income over $150,000 ($300,000 married filing jointly).
- Overtime: up to $12,500 ($25,000 jointly) of the premium part of overtime required by the Fair Labor Standards Act, with the same phase-out as tips.
- Car loan interest: up to $10,000 a year on a loan taken out after 2024 for a new car, SUV, van, pickup or motorcycle for personal use whose final assembly was in the US. It falls by $200 for every $1,000 over $100,000 ($200,000 jointly). You must report the vehicle identification number.
- Seniors: $6,000 for each person aged 65 or over (born before 2 January 1962 for 2026), reduced by 6% of income above $75,000 ($150,000 jointly).
The cap on deductible state and local taxes (SALT) for people who itemize is $40,400 for 2026, reduced by 30% of income above $505,000, but never below $10,000. The calculator shows your cap separately because it only helps if you itemize.
These are deductions, not tax-free income: they lower your taxable income, so the saving is roughly the deduction times your tax rate. Social Security and Medicare taxes are still charged on tips and overtime.
Good to know
- Assumes the standard deduction and 2026 federal tax brackets, with no other credits.
- Married couples filing separately cannot claim the tips and overtime deductions; this case is not modelled.
- A valid Social Security number and other conditions apply. The calculator cannot check whether your job, tips, overtime or vehicle qualify.
- Rules checked on IRS.gov on 5 November 2026. Not tax advice.