Can I claim the tips deduction and the overtime deduction together?

Example math

You’re a single server. In 2026 you report $12,000 of qualified tips, and your employer tells you your FLSA overtime premium for the year (the “half” of time-and-a-half) was $600. Your MAGI is under $150,000. Your federal marginal rate is 22%. All amounts are illustrative; use your own.

1. 1Total additional deduction = $12,000 + $600 = $12,600.
2. 2Illustrative federal income-tax savings ≈ $12,600 × 0.22 = $2,772.
3. 3Both amounts stay in your income for Social Security and Medicare. The IRS instructions say overtime is subject to income tax and generally Social Security and Medicare tax, and reported tips generally are too.

Not tax advice. Filing status, MAGI, whether you’re covered by federal overtime rules, and what counts as a qualified tip change the outcome.

Plain English

Two deductions, one schedule

The IRS put both deductions on Schedule 1-A. Part II is No Tax on Tips; overtime has its own part. Each part figures its own deduction from your own amounts, and the schedule’s last part adds them together with any other Schedule 1-A deductions. Both are available whether you take the standard deduction or itemize, for tax years 2025 through 2028.

What counts as qualified overtime

The IRS defines qualified overtime compensation as overtime paid to you as required under section 7 of the Fair Labor Standards Act that is more than your regular rate of pay. That generally means the “half” portion of time-and-a-half, which employers may call “overtime premium” or “FLSA Overtime Premium.” You have to be covered by, and not exempt from, federal overtime rules.

The IRS instructions list amounts that don’t count:

• Overtime pay above time-and-a-half, such as the extra part of double time.
• Extra pay for weekends or holidays when you didn’t work more than 40 hours that week.
• Overtime paid under state law to someone federal overtime rules don’t cover.
• Any amount you receive as a qualified tip.

The same dollar can’t count twice

The IRS instructions say qualified overtime compensation doesn’t include any amount you receive as a qualified tip. Your tips go in the tips part; only the overtime premium your employer pays you goes in the overtime part.

Separate caps, one MAGI

The tips deduction is capped at $25,000 per return. The overtime deduction is capped at $12,500, or $25,000 if married filing jointly, and for a joint return that cap covers both spouses’ overtime combined. Each deduction is then reduced by $100 for each full $1,000 your MAGI is over $150,000 ($300,000 joint). Both use the same MAGI. See the tips cap and phase-out.

Who can claim

For both, the person who received the tips or overtime needs a valid Social Security number, and married couples must file jointly. The tips deduction also requires tips from a listed occupation: see Which jobs qualify?

Finding your overtime number

For 2025, employers weren’t required to report qualified overtime separately on Form W-2. Some show it in box 14. The IRS says that if you ask your employer for your FLSA Overtime Premium, you can rely on what they give you, and it describes other reasonable methods if they won’t. Keep a copy of whatever you used.