Many of the individual income tax provisions are written as permanent or long-term extensions, though some deductions and exclusions include specific statutory time frames.

No. The One Big Beautiful Bill does not eliminate federal income tax on all tip income. Instead, it creates a limited above-the-line deduction for qualified tips, subject to annual caps, income phaseouts, occupation rules, and an expiration date .

Key details:

Effective for: Taxable years beginning after December 31, 2024 (2025–2028 returns)

Maximum deduction:

Up to $25,000 per year per taxpayer

Income phaseout:

Deduction reduced by $100 for every $1,000 of modified AGI over:

$150,000 (single)

$300,000 (married filing jointly)

Who qualifies:

Only cash tips received in occupations that customarily and regularly received tips on or before December 31, 2024, as determined by Treasury

Important limitations:

Tips must still be reported

Tips are not excluded from payroll taxes (Social Security and Medicare still apply)

Expiration:

The tip deduction terminates after December 31, 2028

Yes. Overtime pay still counts as income, but the law allows a separate deduction for qualified overtime compensation, subject to caps, income limits, and an expiration date .

Key details:

Effective for: Taxable years beginning after December 31, 2024 (2025–2028 returns)

Maximum deduction:

$12,500 per year (single)

$25,000 per year (married filing jointly)

Income phaseout:

Reduced by $100 for every $1,000 of modified AGI over:

$150,000 (single)

$300,000 (married filing jointly)

What qualifies:

Only overtime compensation required under the Fair Labor Standards Act, meaning pay above the regular rate

What does not change:

Overtime wages remain reportable on W-2s

Payroll taxes still apply

Expiration:

The overtime deduction terminates after December 31, 2028

Changes to taxable income and deductions may affect withholding accuracy. Reviewing withholding after major tax law changes is often advisable.

The impact depends on your income sources, age, filing status, and deductions. Many taxpayers will see changes to how taxable income is calculated under the new law.

For individuals navigating these changes, working with a professional who regularly prepares and reviews returns under current federal law can help ensure accuracy. Pink Harbor’s Individual Income Tax Preparation Services support taxpayers in applying new federal tax laws correctly and confidently.