New federal tax law · 2025 to 2028
“No tax on tips” and overtime: what it really means
The 2025 law did not make tips and overtime fully tax-free — it created new deductions. Here is who can claim them, how much, and what to bring so you don't miss out.
Tips: deduct up to $25,000
- For tips in jobs that customarily get tips — restaurant and bar staff, salon and barbershop workers, delivery and rideshare drivers and others on the official list
- Cash tips, card tips and shared tips can count. They must be reported — on your W-2, a 1099, or on your return
- Works for employees and many self-employed workers
- Limit goes down when income is over $150,000 ($300,000 for married couples filing jointly)
Overtime: deduct up to $12,500
- Only the extra “half” of time-and-a-half counts — not your whole overtime pay
- Up to $12,500, or $25,000 for married couples filing jointly
- Same income limits as tips
- Your pay stubs or employer statement show the amount — bring them
Two more new deductions
- Car loan interest — up to $10,000 a year on a loan for a new car assembled in the U.S., taken out after 2024, secured by a lien on the car, for personal use. We need the car's VIN and the loan statement.
- Age 65 and older — an extra $6,000 per person ($12,000 for a couple), reduced above $75,000 of income ($150,000 joint).
What everyone should know
- You can take these deductions even if you don't itemize
- You need a valid Social Security number, and married couples must file jointly
- They lower federal income tax. Social Security and Medicare taxes still apply, and New York State and City taxes follow their own rules
- They run for tax years 2025 through 2028
Already filed your 2025 return?
Many people filed without claiming these. Bring your return — we review it for free, and if an amended return would help, we explain the price before we begin.
What it costs
Minimum fees from our price list. We look at your papers first, and your price is explained and agreed with you before we begin. Our fee is never based on your refund.
| Service | Minimum fee |
|---|---|
| Base return: Form 1040 + New York, up to 3 W-2s | $175 |
| Each extra W-2 or 1099 | $10 |
| Amended return (free if our error) | $150 |
| Review of last year's return | Free |
See the full price list → · Every personal and business return includes up to $1 million in audit defense services, paid by us.
Questions
Are my tips completely tax-free now?
No. The law created a federal deduction of up to $25,000 of qualified tips. Your tips are still income, and Social Security and Medicare taxes still apply.
My employer didn't show my overtime separately. Can I still claim it?
Often yes. For 2025, employers were not required to show it in a special box, so we can use your pay stubs or a statement from your employer to figure the amount.
I'm self-employed and get tips. Do I qualify?
You may, if your work is on the official list of tipped jobs and other rules are met. The deduction cannot be more than your net profit from that work.
I bought a used car. Can I deduct the interest?
No. The car loan interest deduction is only for new cars with final assembly in the U.S., bought for personal use with a loan taken out after 2024.
Does New York State give the same deductions?
Not automatically. New York State and City have their own rules. We prepare your federal, state and city returns together and apply what is allowed.
Talk to us — the first conversation is free
Come to 451 Rockaway Avenue, drop off your papers, or work with us from home through our secure client portal.
More guides: Rideshare & delivery drivers · Unfiled returns · What to bring
General information, not tax advice for your situation. Rules and limits apply.