Tips, overtime, and Social Security
Moving
The deductions are real, temporary, and smaller than “no tax.” Nobody filibustered them.
Post this to X, with the sourceThe promise
No tax on tips. No tax on overtime. No tax on Social Security.
What happened
- Public Law 119-21, signed July 4, 2025.
- Tips deduction, up to $25,000, through 2028.
- Overtime-premium deduction, through 2028.
- Extra $6,000 deduction at age 65, through 2028.
The One Big Beautiful Bill Act, Public Law 119-21, was signed July 4, 2025. It passed on reconciliation. FactCheck.org reports that not one Democrat in the House or the Senate voted for it. The filibuster did not apply, because reconciliation is a majority vote.
The IRS: for tax years 2025 through 2028, qualified tips are deductible up to $25,000. The deduction phases out above $150,000 of modified adjusted gross income, or $300,000 for a joint return. It is available even if you do not itemize. You need a Social Security number, and a married couple must file jointly. Self-employed people in a specified service business are out, and so are their employees. The deduction cannot exceed net income from the tipped work.
Overtime is not the whole check. The IRS says the deduction is the premium above the regular rate — the “half” in time-and-a-half — and only when the Fair Labor Standards Act requires that premium. Same years, same phaseout shape.
“No tax on Social Security” did not become a repeal of the tax on benefits. FactCheck.org, citing the statute and the Tax Policy Center: people 65 and older get an additional deduction of $6,000, whether or not they receive Social Security, phasing out at $75,000 or $150,000 for joint filers. The Tax Policy Center found it helps fewer than half of older adults. Of those who benefit from the tips deduction, the average cut is about $1,480, and about 3 percent of taxpayers qualify. About 10 percent benefit from the overtime deduction, by about $1,200 on average.
What is holding it up
Nothing in the Senate stopped this. The limit is the text that passed. The deductions expire after 2028. They are capped and income-tested. Payroll taxes — the Social Security and Medicare tax taken out of a paycheck — are not repealed by an income-tax deduction. Making the slogans literal would be a new bill.
Still ahead
- Not a full repeal. Not permanent. Payroll tax remains.
- Extension past 2028 needs another vote.
Dates
July 4, 2025 · Law
Public Law 119-21 signed
The reconciliation tax bill. Tips, overtime, and the senior deduction live here.
2025–2028 · IRS
Deductions, not a blank exemption
IRS guidance: caps, phaseouts, Social Security number rules, and the overtime “half” only.
Oct 2026 · Analysis
Who actually benefits
FactCheck.org and the Tax Policy Center on how narrow the three deductions are.
If your job is on the IRS tipped-occupation list, or you earn real FLSA overtime, there is a deduction on 2025 through 2028 returns. Read the caps before you spend the refund. If you are counting on Social Security benefits becoming fully untaxed, that is not what the law says.
Updated October 13, 2026.
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