Notice 2025-69, clarifies how workers can determine the deduction amount without receiving a separate accounting from their employer for cash tips or qualified overtime on information returns such as Form W-2, Wage and Tax Statement, or a Form 1099.
H.R. 1 provisions - The provisions on tip and overtime compensation were enacted as part of H.R. 1, P.L. 119-21, commonly known as the One Big Beautiful Bill Act. For tipped workers, the maximum annual deduction is $25,000, which phases out for taxpayers with modified adjusted gross income (AGI) over $150,000 ($300,000 for joint filers).
For those who receive qualified overtime, the maximum annual deduction is $12,500 ($25,000 for joint filers). The deduction phases out for taxpayers with modified AGI over $150,000 ($300,000 for joint filers).
Please click here to read the full article in the Journal of Accountancy by Martha Waggoner.