How much do the 2025 tax rules save you?
The One Big Beautiful Bill Act created four new deductions for 2025–2028. Enter what applies to you — this combines all of them, applies each phase-out, and estimates your total federal income tax savings.
Updated for tax year 2025 · combines tools tips, overtime, car loan + senior
These are federal income-tax deductions, not credits — they reduce taxable income, so the cash benefit is deduction × marginal rate. FICA and state taxes are unaffected by tips/overtime portions. Educational estimate, not tax advice.
The four deductions at a glance
| Deduction | Max | Phase-out begins (single / joint) |
|---|
| Qualified tips | $25,000 | $150k / $300k |
| Overtime (premium half) | $12,500 / $25,000 | $150k / $300k |
| Car loan interest | $10,000 | $100k / $200k |
| Senior (per person 65+) | $6,000 | $75k / $150k |
How the calculation works
Each deduction is capped, then independently reduced by its own MAGI phase-out ($100 per $1,000 over the threshold). The four results are summed, and your estimated cash savings is the total deduction times your federal marginal rate. Phase-outs use the same modified-AGI figure for all four.
FAQ
Can I claim more than one?
Yes. They're independent above-the-line deductions; claim every one you qualify for.
Are these permanent?
No — they apply to tax years 2025 through 2028 under current law.
Do I need to itemize?
No. All four are available without itemizing.
People also ask
How do I calculate my overtime tax deduction?
Take only the premium half of your time-and-a-half overtime, multiply it by your overtime hours for the year, and cap the result at the annual limit. If your regular rate is $25, the overtime rate is $37.50 and the premium is $12.50 per hour, so 300 overtime hours give 300 × $12.50 = $3,750 of deduction. Your savings are that deduction times your marginal federal income tax rate, less any reduction from the income phase-out, which this calculator applies automatically.
How does the new $6,000 tax deduction work?
The $6,000 deduction is the OBBBA's extra deduction for taxpayers age 65 or older, available for tax years 2025 through 2028 on top of the regular standard deduction. It is per qualifying person, so two spouses who are both 65 or older can claim it twice, and it phases out above a modified adjusted gross income threshold. Enter your age and income in the calculator to see how it stacks with the tips, overtime, and car loan interest deductions; this is general information, not tax advice.
How can I calculate my taxes under the One Big Beautiful Bill Act?
Start from your normal federal return, then subtract each OBBBA deduction you qualify for: qualified tips, the overtime premium, car loan interest on a qualifying vehicle, and the senior deduction, each limited by its own cap and phase-out. Multiply the total deduction by your marginal federal income tax rate to estimate the savings, remembering that none of these reduce Social Security or Medicare tax and most states do not follow them either. This calculator combines all four so you do not have to track the caps by hand; treat the result as an estimate rather than tax advice.
How much will no tax on overtime save me?
The savings equal your deductible overtime premium times your marginal federal income tax rate, which is usually far less than the overtime pay itself. For example, $4,000 of premium pay at a 22% marginal rate saves $4,000 × 0.22 = $880 in federal income tax, and nothing on payroll or state tax. The deduction is capped per year and phases out at higher incomes, so higher earners may see a smaller or zero benefit.
What is the formula to calculate overtime?
Under the Fair Labor Standards Act, overtime pay = hours worked over 40 in a workweek × regular hourly rate × 1.5. For a $20 rate and 48 hours, that is 8 × $20 × 1.5 = $240 of overtime on top of 40 × $20 = $800 regular pay. For the OBBBA deduction only the premium part counts, which is hours over 40 × regular rate × 0.5, or $80 in that example.