personalOBBB

OBBBA Numbers Made Simple: A Cheat Sheet for Individuals & Families

Qualified Tips Deduction (§224)

  • Annual Deduction Cap: $25,000
  • Eligible Income: Cash tips reported on required statements or Form 4137
  • Occupation Restriction: Only listed occupations qualify where tipping is customary.
  • MAGI Phase-Out Threshold:
    • $150,000 (Single)
    • $300,000 (Married Filing Jointly)
  • Phase-Out Rate: $100 reduction per $1,000 (or fraction) above threshold
  • Filing Requirement: Married taxpayers must file jointly to claim up to MFJ cap.

Example:

  • MAGI: $165,000 (Single)
  • Phase-Out: $1,500
  • $20,000 tips → $18,500 deductible

 

Qualified Overtime Deduction (§225)

  • Annual Cap:
    • $12,500 (Single)
    • $25,000 (Married Filing Jointly)
  • Eligible Income: FLSA-required overtime premium portion (“half” portion of time and a half)
  • MAGI Phase-Out Threshold:
    • $150,000 (Single)
    • $300,000 (Joint)
  • Phase-Out Rate: $100 per $1,000 above threshold
  • Filing Requirement: Married taxpayers must file jointly to claim up to MFJ cap.

Example:

  • Joint MAGI: $325,000
  • Phase-Out: $2,500
  • $25,000 cap − $2,500 = $22,500 deduction

 

Senior Deduction (§151(d)(5)(C))

  • Deduction Amount: $6,000 per qualified individual
  • Age Requirement: Must attain age 65 by year-end
  • Expiration: Tax years before January 1, 2029
  • MAGI Phase-Out Threshold:
    • $75,000 (Single)
    • $150,000 (Joint)
  • Phase-Out Rate: 6% of MAGI above threshold
  • Filing Requirement: Married taxpayers must file jointly to claim up to MFJ cap

Example:

  • MAGI: $95,000 (Single)
  • Reduction: $1,200
  • Allowable Deduction: $4,800

 

Standard Deduction 

  • 2025 Fixed Amounts:
    • Single / MFS: $15,750
    • Head of Household: $23,625
    • MFJ / Surviving Spouse: $31,500
  • Inflation Indexing: Applies for tax years after 2025

 

Adoption Credit (§23)

  • Refundable Portion: Up to $5,000
  • Inflation Indexing: Applies for years after 2025
  • Other Limits: Existing adoption credit rules and phaseouts continue to apply

 

Trump Accounts

  • Annual Contribution Limit: $5,000
  • Inflation Indexing: Applies after 2027
  • Age Limit: Contributions allowed only before beneficiary turns 18
  • Sub-Caps: $2,500 limitation applies to certain statutory components
  • Reporting and Investment Rules: Governed by statute
  • Tax Deferred-IRA-like treatment – rules still forming

Tips and Overtime Reporting (Cross-Reference)

  • Recipient Statements: Must separately state cash tips and recipient occupation
  • Overtime Reporting: Similar separate reporting required for qualified overtime amounts
  • Transition Relief: Available per IRS guidance

 

Calculation Reference (Formula Summary)

  • Tips & Overtime Phase-Outs:
    • Apply dollar cap first
    • Reduction = $100 × ceiling((MAGI − threshold) ÷ $1,000)
  • Senior Deduction Phase-Out:
    • Reduction = 6% × (MAGI − threshold)

 

Accounting, Financial Planning, Individuals & Families

Jan 25, 2026

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