Taxes · Free tool
The four new OBBBA deductions for 2026
The One Big Beautiful Bill Act handed working people four brand-new tax breaks: no tax on tips, no tax on overtime, a bonus for seniors, and a write-off for car loan interest. They run from 2025 through 2028. Here is what each one is worth, who qualifies, and a quick estimate of your own.
Quick answer: for 2025 to 2028 you may deduct up to $25,000 of tips, up to $12,500 of overtime premium ($25,000 joint), an extra $6,000 per senior age 65+, and up to $10,000 of car loan interest on a new US-built vehicle. Each phases out above an income limit. You get them whether or not you itemize.
Estimate your deductions
Estimated total deductions
$0
Add your tips, overtime, seniors, or car loan interest above.
How this is worked out
Each deduction is capped and applies in full when your modified AGI is at or below its income limit. Above the limit it phases out, so the figure here shows the full amount and flags anything past the limit for you to confirm with the IRS.
A deduction lowers the income you are taxed on, so its cash value is roughly the deduction times your tax rate. The savings line uses your bracket on the income you entered.
The four deductions, side by side
| Deduction | Max amount | Phases out above (MAGI) | Key rule |
|---|---|---|---|
| No tax on tips | $25,000 | $150,000 / $300,000 joint | Qualified tips, any worker |
| No tax on overtime | $12,500 / $25,000 joint | $150,000 / $300,000 joint | Only the half-time premium counts |
| Senior bonus | $6,000 per person 65+ | $75,000 / $150,000 joint | Phases out at 6% of excess |
| Car loan interest | $10,000 | $100,000 / $200,000 joint | New, personal, US final assembly |
What counts, and what does not
Tips have to be genuine tips, voluntary and customer-determined, in a job that customarily receives them. Auto-gratuities and service charges the house adds are wages, not tips. The cap is $25,000 a year and it works for employees and the self-employed alike.
Overtime is narrower than people expect. You deduct only the premium portion required by the Fair Labor Standards Act, the extra half in time-and-a-half, not the whole overtime check. If you earned $30 an hour and got $45 for overtime, only the $15 difference per hour counts.
The senior bonus is an extra $6,000 deduction for each filer who is 65 or older, on top of the regular standard deduction and the existing age-based addition. A married couple where both are 65+ gets $12,000. It starts shrinking once modified AGI passes $75,000 single or $150,000 joint, falling by 6 cents per dollar over the line.
Car loan interest is the surprise one. For a loan taken after December 31, 2024 on a new vehicle assembled in the US and used personally, you can deduct up to $10,000 of the interest, even without itemizing. Used cars, leases, and business vehicles are out.
They expire after 2028
All four are temporary, written to apply to tax years 2025 through 2028 only. Unless Congress renews them, they vanish for 2029. That makes the next few years the window to plan around them, whether that is timing a vehicle purchase or tracking tip income carefully.
Sources
- IRS. OBBBA Tax Deductions for Working Americans and Seniors
- IRS. No Tax on Tips and Overtime
- IRS. Q&A on the Qualified Overtime Deduction
Educational estimate, not tax advice. Figures show the full deduction at or below each income limit; above the limit, amounts phase out and the estimate flags them. Eligibility rules (qualified tips, FLSA overtime, vehicle assembly) have detail this tool does not capture. Confirm with the IRS or a qualified professional.