Millions of Americans who receive tips or overtime pay have been issued new guidance from the Internal Revenue Service ( IRS ) clarifying what tax deductions are available to them.

Why It Matters

This guidance stems from provisions enacted in the One Big Beautiful Bill Act. The IRS estimates that about 6 million workers report tipped wages annually, highlighting broad potential impacts on household finances and tax planning for both individuals and employers across the country.

What To Know

On Friday, the IRS and Treasury Department released detailed instructions for workers claiming new deductions for tips and overtime pay for tax year 2025.

Tips Deduction: Workers in occupations that customarily receive tips—such as restaurant servers, bartenders, and certain self-emplo

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