--- title: OBBBA Introduces Tax Relief on Qualified Tips and Overtime description: The OBBBA allows eligible workers to deduct up to $25,000 in qualified tips and up to $12,500 in overtime pay each year from their taxable income through 2028. image: https://blog.nisbenefits.com/hubfs/blog-headers/tips-overtime-b.jpg --- ![tax relief on wood blocks](https://blog.nisbenefits.com/hubfs/blog-headers/tips-overtime-b.jpg) # OBBBA Introduces Tax Relief on Qualified Tips and Overtime - Home - [Employee Benefit News for School, City and County Employers](https://blog.nisbenefits.com) - OBBBA Introduces Tax Relief on Qualified Tips and Overtime [ Erin Woulfe ](https://blog.nisbenefits.com/author/erin-woulfe) 07/21/2025 [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) [0 Comments ](https://blog.nisbenefits.com/tax-relief-qualified-tips-and-overtime#postComment) 1 Minutes On July 4, 2025, the [One Big Beautiful Bill Act](https://www.congress.gov/bill/119th-congress/house-bill/1/text/eas) (OBBBA) was signed into law, introducing a new above-the-line deduction for qualified tips and overtime pay available to eligible workers from 2025 through 2028.   ## **Tip Deductions** Section 70201 of the OBBBA allows individuals earning up to $150,000 ($300,000 joint) to deduct up to $25,000 in qualified cash tips per year, if paid voluntarily and not subject to negotiation. To qualify, individuals must work in tip-based jobs as of December 31, 2024. The Treasury Department will publish a list of qualifying occupations within 90 days of the OBBBA’s enactment. Qualified tips must be reported on Form W-2 or 4137 and are still subject to standard IRS reporting requirements. Social Security numbers are required on the tax return.   ## **Overtime Deductions** Section 70202 of the OBBBA provides a new tax deduction for qualified overtime pay, up to $12,500 per year ($25,000 for joint filers), with a phase-out for those earning above $150,000. This deduction must be listed separately on Form W-2 and excludes tips.   ## **Next Steps for Employers** Employers may need to update payroll systems to track and report qualified tips and overtime on employees’ W-2s. Download the [bulletin](https://blog.nisbenefits.com/hubfs/blog-supporting-docs/bulletin-eliminates-taxes-qualified-tips-overtime.pdf) for more details. [![Taxability of Group Term Life Insurance Benefits Guide](https://no-cache.hubspot.com/cta/default/3325505/0cef3b24-14ad-4fdc-840e-90e9c54509a0.png)](https://cta-redirect.hubspot.com/cta/redirect/3325505/0cef3b24-14ad-4fdc-840e-90e9c54509a0)   --- #### Tag: [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) #### Share: - [Follow us on Facebook ](http://www.facebook.com/share.php?u=https://blog.nisbenefits.com/tax-relief-qualified-tips-and-overtime) - [Follow us on Twitter ](https://twitter.com/intent/tweet?url=https://blog.nisbenefits.com/tax-relief-qualified-tips-and-overtime&text=OBBBA%20Introduces%20Tax%20Relief%20on%20Qualified%20Tips%20and%20Overtime) - [Follow us on Linkedin ](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.nisbenefits.com/tax-relief-qualified-tips-and-overtime) - [Follow us on Pinterest ](http://pinterest.com/pin/create/button/?url=https://blog.nisbenefits.com/tax-relief-qualified-tips-and-overtime&text=OBBBA%20Introduces%20Tax%20Relief%20on%20Qualified%20Tips%20and%20Overtimedescription=On%20July%204,%202025,%20the%20One%20Big%20Beautiful%20Bill%20Act%20(OBBBA)%20was%20signed%20into%20law,%20introducing%20a%20new%20above-the-line%20deduction%20for%20qualified%20tips%20and%20overtime%20pay[...]&media=https://3325505.fs1.hubspotusercontent-na1.net/hubfs/3325505/blog-headers/tips-overtime-b.jpg) --- [ #### Student Loan Repayment Benefit by Employers Becomes Permanent ##### Previous Post ](https://blog.nisbenefits.com/student-loan-repayment-benefit-permanent) [#### Tax-Advantaged Trump Accounts Now Available for Children ##### Next Post ](https://blog.nisbenefits.com/tax-advantaged-trump-accounts-children) ### Leave a Reply This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. ### Category - [Legislative News (1149)](https://blog.nisbenefits.com/topic/aca-other-legislative-news) - [Health Insurance Solutions (504)](https://blog.nisbenefits.com/topic/health-insurance-solutions) - [COVID-19 (209)](https://blog.nisbenefits.com/topic/covid-19) - [Ancillary Benefits (175)](https://blog.nisbenefits.com/topic/ancillary-benefits) - [Mental Health (122)](https://blog.nisbenefits.com/topic/mental-health) ### Popular Posts [ Steve Smith ](https://blog.nisbenefits.com/author/steve-smith) 02/16/2024 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions) [ Understanding Embedded vs. Nonembedded Deductibles ](https://blog.nisbenefits.com/understanding-embedded-nonembedded-deductibles) [ Erin Woulfe ](https://blog.nisbenefits.com/author/erin-woulfe) 02/09/2026 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) [ IRS Releases 2027 Health Plan Cost-sharing Limits ](https://blog.nisbenefits.com/2027-health-plan-cost-sharing-limits) [ Valerie Ortiz ](https://blog.nisbenefits.com/author/valerie-ortiz) 02/17/2026 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ The Administrator's Corner](https://blog.nisbenefits.com/topic/the-administrators-corner) [ 4 Employee Wellness Trends You Can’t Ignore in 2026 ](https://blog.nisbenefits.com/2026-employee-wellness-trends) [ Dina Lubben ](https://blog.nisbenefits.com/author/dina-lubben) 11/14/2025 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) [ Trump Administration Unveils Plan to Make GLP-1 Drugs Affordable ](https://blog.nisbenefits.com/trump-administration-plan-glp1-drugs-affordable) --- ## Related Posts [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news), [ The Administrator's Corner](https://blog.nisbenefits.com/topic/the-administrators-corner) [ Valerie Ortiz ](https://blog.nisbenefits.com/author/valerie-ortiz) 07 July, 2026 #### [New CMS Report: Healthcare Spending Trends Through 2034](https://blog.nisbenefits.com/healthcare-spending-trends-through-2034) New projections from the U.S. Centers for Medicare and Medicaid Services (CMS) Office of the… [Read More](https://blog.nisbenefits.com/healthcare-spending-trends-through-2034) [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news), [ The Administrator's Corner](https://blog.nisbenefits.com/topic/the-administrators-corner), [ Mental Health](https://blog.nisbenefits.com/topic/mental-health) [ Steve Smith ](https://blog.nisbenefits.com/author/steve-smith) 06 July, 2026 #### [New HHS Rule Expands Catastrophic Coverage Access](https://blog.nisbenefits.com/new-hhs-rule-expands-catastrophic-coverage-access) The U.S. Department of Health and Human Services’ (HHS) Notice of Benefit and Payment Parameters… [Read More](https://blog.nisbenefits.com/new-hhs-rule-expands-catastrophic-coverage-access) [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) [ Mari Wagner ](https://blog.nisbenefits.com/author/mari-wagner) 25 June, 2026 #### [Federal Court Blocks Key ACA Exchange Restrictions](https://blog.nisbenefits.com/federal-court-blocks-key-aca-exchange-restrictions) A recent federal court ruling blocked stricter ACA Marketplace eligibility and enrollment… [Read More](https://blog.nisbenefits.com/federal-court-blocks-key-aca-exchange-restrictions)