a) Expanded SALT Deduction
The limit on the State and Local Tax (SALT) deduction has temporarily increased to: • $40,000 for most filers ($20,000 if married filing separately), up from $10,000 previously. The cap will rise to $40,400 for the 2026 tax year. This makes itemizing more valuable than previous years.
b) “No Tax on Tips” Deduction
For 2025, employees and self-employed individuals may deduct up to $25,000 of qualified tip income from taxable income. • Applies to tips reported on W-2, printed 1099s, or directly reported to the IRS.
• You can claim this whether you itemize or take the standard deduction.
c) “No Tax on Overtime” Deduction
Taxpayers may also deduct up to $12,500 (single) or $25,000 (joint) of qualified overtime compensation — again, regardless of itemizing status.
📌 Note: These two deductions are relatively new and are claimed on Schedule 1-A of Form 1040. Make sure payroll and tip income records are accurate.
