--- title: "Can You Claim Tips and Overtime Deductions?" description: "Yes, if you qualify for each. Schedule 1-A figures the tips and overtime deductions in separate parts, each with its own cap, then adds them together." url: https://www.tipmaxapp.com/us/answers/tips-deduction-vs-overtime-deduction language: en publisher: TipMax (Entermaurs Incorporated) date_published: 2026-09-23 last_verified: 2026-09-23 --- # Can I claim the tips deduction and the overtime deduction together? **Short answer:** **Yes, if you qualify for each.** Schedule 1-A figures the two deductions separately, tips in Part II and overtime in its own part, then adds them together. Each has its own cap: up to **$25,000** of tips and up to **$12,500** of overtime (**$25,000** joint). Only the “half” of time-and-a-half counts as qualified overtime, and the IRS says a qualified tip can’t also count as overtime. ## 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. | | Tips deduction | Overtime deduction | | --- | --- | --- | | Where it’s figured | Schedule 1-A, Part II | Schedule 1-A, the overtime part | | Your qualifying amount | $12,000 | $600 | | Cap | $25,000 per return | $12,500 ($25,000 joint) | | Phase-out starts above MAGI of | $150,000 ($300,000 joint) | $150,000 ($300,000 joint) | | Deduction in this example | **$12,000** | **$600** | 1. Total additional deduction = $12,000 + $600 = **$12,600**. 2. Illustrative federal income-tax savings ≈ $12,600 × 0.22 = **$2,772**. 3. Both 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](https://www.tipmaxapp.com/us/answers/no-tax-on-tips-dollar-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?](https://www.tipmaxapp.com/us/answers/who-qualifies-tipped-occupations) ### 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. ## Common mistakes - Counting your whole overtime check instead of only the “half” of time-and-a-half. - Putting tips in the overtime part, or the same money in both. - Assuming the two caps combine into one. They’re figured separately. - Expecting either deduction to remove Social Security and Medicare tax. ## Official sources - [IRS: Instructions for Form 1040 (2025), Schedule 1-A, No Tax on Overtime](https://www.irs.gov/pub/irs-pdf/i1040gi.pdf) - [Schedule 1-A (Form 1040)](https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf) - [IRS newsroom: What to know about the No Tax on Overtime deduction](https://www.irs.gov/newsroom/what-to-know-about-the-no-tax-on-overtime-deduction) - [IRS newsroom: Questions and answers about the new deduction for qualified overtime compensation](https://www.irs.gov/newsroom/questions-and-answers-about-the-new-deduction-for-qualified-overtime-compensation) - [IRS newsroom: Tax deductions for working Americans and seniors](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors) ## Last verified September 23, 2026. Checked the 2025 Instructions for Form 1040 (Schedule 1-A, the No Tax on Overtime part), 2025 Schedule 1-A, and three IRS newsroom pages on the overtime and tips deductions. Confirmed: separate parts added together, $12,500/$25,000 overtime cap, $25,000 tips cap, $150,000/$300,000 phase-out, “half” portion rule, tips excluded from qualified overtime. **Still open:** How overtime is figured when an employer takes a tip credit isn’t covered here; ask your employer for your FLSA Overtime Premium. ## Related - [How do I claim this on Schedule 1-A?](https://www.tipmaxapp.com/us/answers/how-to-claim-schedule-1a) - [What’s the cap and phase-out?](https://www.tipmaxapp.com/us/answers/no-tax-on-tips-dollar-cap-and-phase-out) - [Do I still pay Social Security and Medicare on tips?](https://www.tipmaxapp.com/us/answers/do-i-still-pay-social-security-medicare-on-tips) - [Married filing and the tip deduction](https://www.tipmaxapp.com/us/answers/married-filing-and-tip-deduction) ## How TipMax helps with this Both deductions start from your own numbers: the tips you kept and the pay stubs that show your overtime. TipMax is an iPhone app for servers and bartenders that tracks tips and tip-outs and turns a restaurant menu into study flashcards. - Log cash and card tips per shift in seconds. - Weekly, monthly, and pay-period totals. - Download all your data as a CSV any time. Download TipMax free: https://apps.apple.com/us/app/tipmax-study-track-earn/id6744850146 --- TipMax Answers explains public IRS guidance in plain English for tipped workers. It is **not tax, legal, or accounting advice**. Rules can change. Confirm figures on IRS.gov and with a qualified tax professional before you file. TipMax the app helps you track tips and true hourly pay; it does not file your taxes.