1. New Rules for Tips and Overtime
If you work in Orlando's hospitality industry — from the restaurants on Sand Lake Road to the theme parks — the 2025 federal tax law (the "One Big Beautiful Bill Act") added two new deductions that may matter to you: up to **$25,000 of qualified tip income** and up to **$12,500 of qualified overtime pay** ($25,000 joint), both available for 2025 through 2028 and claimed on the new Schedule 1-A. Two things to understand up front: 1. **These are deductions, not credits.** They reduce the income you are taxed on; they are not a dollar-for-dollar reduction of your tax bill. 2. **Eligibility depends on your occupation, your income, and your records.** There are caps, and the IRS issues guidance on which occupations and types of pay qualify. We check the current rules against your actual pay records rather than assuming.
2. Tip Reporting Still Comes First
Most employers report credit card tips automatically, but cash tips are where records get thin. Report all your tips — over-reporting is not a strategy, and under-reporting creates real risk, including losing refundable credits like the Earned Income Tax Credit if your reported income drops too low. Keep a daily tip log, and keep your year-end pay stubs that show how tips and overtime were reported. Those documents are what make the new deductions possible to claim accurately.
3. The Overtime Deduction, in Plain Terms
If you pick up extra shifts during peak seasons, some of your overtime pay may qualify for the new deduction — up to $12,500 per year ($25,000 if married filing jointly). One key nuance: the qualified amount is generally the **premium portion** of overtime pay (the extra half of time-and-a-half), not your entire overtime check. Your W-2 for 2026 may show the qualified amount in Box 12 with Code TT. The deduction phases out above $150,000 of MAGI ($300,000 joint), and is claimed on the new Schedule 1-A. We review your W-2s and pay stubs to see what may qualify under the current IRS guidance.
4. Theme Park and Restaurant W-2s Together
Many Orlando hospitality workers have two jobs — server some nights, theme park shifts by day. Neither employer knows about the other, so both may withhold as if you were in a lower bracket. That is the "withholding trap," and it often causes a surprise bill at tax time. We report your W-2s together, check your withholding across employers, and help you adjust your W-4 so next year is smoother.
5. What About Uniforms, Shoes, and Union Dues?
For most employees, these costs are **not deductible** for federal income tax under current law. Non-slip shoes, costume cleaning, union dues, and similar unreimbursed employee expenses were suspended for most taxpayers years ago, and the new tips and overtime deductions do not change that. If someone tells you otherwise, ask them to show you the rule.
6. What You Can Do Now
1. **Keep a daily tip log** — cash tips included, written at the end of each shift. 2. **Keep every pay stub** — especially ones showing overtime hours and tip amounts. 3. **Ask how your employer reports tips and overtime on your W-2** — the new rules tie to those figures. 4. **Bring your records to your appointment** — we will check what you may qualify for under the current rules. Ready to have your tips and overtime reviewed? Start your secure intake with GTQ Tax & Advisory. *General information only, not tax advice for your situation. Rules and limits change — verify current IRS guidance or ask a qualified preparer.*