No Tax on Overtime and Tips

Want to see how to pay no taxes on overtime or tips? Read this quick guide.

Tax season 2026 is approaching and many people are asking us this about these changes.

No tax on overtime rules:

No tax on overtime allows filers to deduct $12,500 if single or $25,000 if filing married jointly.  The deduction starts to phase out if you make over $150,000 single or $300,000 for joint filers.  You will still owe Social Security and Medicare taxes on your overtime pay.  If you are an exempt employee (paid on a salary typically) then you will not qualify for the deduction. 

To find your overtime pay your employer will either give you a required sheet showing your overtime pay or they may put the total amount on box 14 of your W-2.

No tax on tips rules:

Similarly no tax on tips allows you to exclude $25,000 in tips if single or $50,000 if married filing joint.  It has the same phase outs as above.  You must have a job in an industry where receiving tips is regular and customary.  Social Security and Medicare taxes still apply as well.

The tips must be "voluntary"  meaning not added by default to a bill.  This applies to tips in cash, check, credit card or any other method.   

Your state will likely still tax you on both tips and overtime.  You can't file married filed separate to receive these deductions but you may qualify to file single or head of household depending on your situation and state.  

We can't cover every state and situation in this article, so if you are looking for more assistance please call us at 805-391-7555 or email us at support@foryoutax.com.