OBBBA Tax Savings Calculator
↻ Updated 2026Run the four new deductions from the One Big Beautiful Bill Act together — no tax on tips, no tax on overtime, the $6,000 senior deduction and car loan interest — and see your total federal tax saving for 2026, with a plain verdict on each.
Educational calculators — always consult a licensed professional before making financial decisions.
Your tips are qualified tips, your occupation is on the Treasury list, and your MAGI is below the phase-out — the full amount is deductible.
You're FLSA non-exempt and below the phase-out — the full premium half of your overtime is deductible.
Nobody on this return turns 65 by the end of the tax year, so there's nothing to claim.
Your vehicle and loan both qualify and your MAGI is below the phase-out — the full interest is deductible, up to $10,000.
Runs entirely in your browser — nothing you enter is sent to us.How this works
How to read your combined OBBBA result
Four deductions, one number. On the defaults, $13,920 of deductions produce $1,670 of federal tax saved — 12 cents per deducted dollar, because that is this filer's marginal bracket. The four-provision list underneath is the part worth reading slowly: it tells you not just what each is worth but why, and "you don't qualify because your occupation isn't on the Treasury list" is a different problem from "you don't qualify because your MAGI is too high".
How the four OBBBA deductions combine
Each provision is computed independently against your MAGI, then the four results are summed and subtracted from taxable income in one go. There is no interaction between them and no combined cap — but there is one shared consequence: because all four reduce taxable income rather than AGI, none of them lowers the MAGI that governs the others' phase-outs. The arithmetic is deliberately non-circular.
The saving is then the difference between two complete bracket calculations, not the deduction times your marginal rate. Those two agree only when the whole deduction sits inside one bracket. When it straddles a bracket line — which a four-provision total often does — the blended value is somewhere between the two rates, and only the two-calculation method gets it right.
MAGI = AGI + §911/§931/§933 foreign-income exclusions tips = min(qualified tips, phased($25,000, $150k/$300k, $100/k ↓)) overtime = min(0.5× premium, phased($12,500*, $150k/$300k, $100/k ↓)) senior = phased($6,000, $75k/$150k, 6%) × individuals 65+ car loan = min(interest paid, phased($10,000, $100k/$200k, $200/k ↑)) * $25,000 on a joint return — overtime is the only cap that doubles ↓ increments rounded down ↑ increments rounded up total deduction = tips + overtime + senior + car loan taxable income = AGI − standard deduction − total deduction tax saved = tax(before) − tax(after) Unchanged by all of the above: AGI, FICA, self-employment tax, state income tax, and the taxable share of Social Security.
- MAGI
- Adjusted gross income plus any foreign-earned-income exclusions — the same figure governs all four phase-outs; Schedule 1-A Part I computes it once and Parts II-V all reference it
- phased(cap, thresholds, rate)
- The cap after the MAGI phase-out for that provision — four different thresholds and three different rates — the provisions share a shape, not a schedule
- 0.5× premium
- The half of time-and-a-half above your regular rate — not the full overtime payment; this single rule cuts the overtime deduction to a third of what most coverage implies
- individuals 65+
- How many people on the return have reached 65 — the 6% phase-out bites the per-person $6,000 before it is multiplied, so a second senior buys no extra runway
- total deduction
- Schedule 1-A Part VI, carried to Form 1040 line 13b — sits beside the standard deduction on line 13a — after AGI on line 11, which is why AGI is untouched
The AGI point is the one that carries the most consequence and gets the least coverage. §63(b) was amended to list all four alongside the standard deduction, so they land after AGI is fixed. Everything on your return that keys off AGI or a MAGI derived from it — the premium tax credit, income-driven student loan repayment, IRA deduction limits, the taxable share of Social Security, IRMAA surcharges, and most state returns that start from federal AGI — sees exactly the number it saw before. These deductions cut your tax bill and change nothing else.
The second thing worth internalising is that all four expire after tax year 2028. That is four filing seasons from enactment, and it means any decision made partly because of them — taking a job with heavy overtime, buying a US-assembled car — should be sized against a benefit with a known end date. For the tax that these deductions genuinely do not touch, the FICA calculator prices the payroll side of the same wages.
Worked examples
Example: a tipped worker with overtime and a car loan
The calculator's defaults — a single filer with $48,000 of base wages, $9,000 of tips in a listed occupation, 180 overtime hours at a $28 regular rate, and $2,400 of interest on a qualifying vehicle loan. Three of the four provisions apply.
| Base wages | $48,000 |
| Tips | $9,000 |
| Gross overtime pay$28 × 1.5 × 180 | $7,560 |
| MAGIfar below every threshold | $64,560 |
| Tips deductionfull amount | $9,000 |
| Overtime deductionthe 0.5× premium only, not the $7,560 | $2,520 |
| Senior deductionnobody 65+ | $0 |
| Car loan interestfull amount | $2,400 |
| Total deduction | $13,920 |
| Taxable income | $48,460 → $34,540 |
| Tax saved12% — one bracket throughout | $1,670 |
$13,920 of deductions, $1,670 of tax. The effective value is exactly 12% because the whole deduction stays inside the 12% bracket. Note the overtime line: $7,560 of overtime pay produced a $2,520 deduction, because two thirds of a time-and-a-half payment is ordinary wages. The FICA on the tips and overtime — $1,267 — is untouched by any of this.
Example: when the deduction crosses a bracket
A single filer with $40,000 of base wages, $22,000 of tips and 320 overtime hours at $25/hr. The deduction total is large enough relative to income to push them out of the 22% bracket entirely.
| MAGI$40,000 wages + $22,000 tips + $12,000 overtime pay | $74,000 |
| Tips deduction | $22,000 |
| Overtime deduction$25 × 0.5 × 320 | $4,000 |
| Total deduction | $26,000 |
| Taxable income beforein the 22% bracket | $57,900 |
| Taxable income afternow in the 12% bracket | $31,900 |
| Federal tax before | $7,450 |
| Federal tax after | $3,580 |
| Tax saved | $3,870 |
| Effective value per $1between 22% and 12% | 14.9% |
14.9% — neither of the two brackets involved. The first $7,500 of the deduction came off at 22%, the remaining $18,500 at 12%, and the blend is what you actually saved. This is why the page computes two full tax calculations rather than multiplying by a marginal rate: a single-rate estimate would have overstated the saving by $1,850 or understated it by $2,750 depending on which rate you picked.
Frequently asked questions
How much will I actually save from the OBBBA tax cuts?
Your total deduction times your marginal rate, roughly — which for most households in the tipped and hourly workforce this package targets means 10 to 22 cents per deducted dollar. On this page's defaults, $13,920 of deductions produce $1,670. A household hitting every cap in the 24% bracket could reach a few thousand dollars; a household below the standard deduction threshold saves nothing at all, because there was no federal income tax to remove.
The three things that most commonly shrink the number below expectations are the overtime premium rule, which cuts that deduction to a third of the overtime pay; the phase-outs, which start at $100,000 of MAGI for car loan interest and $75,000 for the senior deduction; and the plain fact that a deduction returns your marginal rate rather than the whole amount.
Do these deductions reduce my payroll taxes too?
No. All four operate only against federal income tax. Qualified tips and qualified overtime stay in boxes 1, 3 and 5 of your W-2 — the box 12 codes TP and TT are informational — so Social Security and Medicare are computed on exactly the same wages as before. Self-employment tax, which comes off Schedule SE, is likewise untouched.
For a lower-paid worker this matters more than it sounds. On the defaults here, the payroll tax on the tips and overtime is $1,267 against $1,670 of income tax saved — comparable amounts, and only one of them moves. For a worker whose income is low enough that they owed little federal income tax to begin with, FICA is most of what they pay, and none of it is affected.
Can I claim all four OBBBA deductions on the same return?
Yes, if you qualify for each on its own terms — there is no combined cap and no interaction between them. They are claimed in different parts of the new Schedule 1-A: tips in Part II, overtime in Part III, car loan interest in Part IV, the senior deduction in Part V, with Part I computing the MAGI they all reference and Part VI totalling them onto Form 1040 line 13b.
In practice the overlap is narrower than the design suggests. The tips and overtime provisions target the same hourly workforce, but the senior deduction targets retirees who by definition have less wage income, and the car loan interest phase-out starts at $100,000 — the lowest threshold in the package. A household claiming all four is unusual.
Are these deductions available if I take the standard deduction?
Yes — all four, and that is the central design choice of the package. §63(b) lists them alongside the standard deduction, so roughly nine in ten filers who don't itemize get them in full. The senior deduction is available to itemizers too, which the older age-65 addition to the standard deduction is not.
They remain below-the-line deductions, though. They reduce taxable income and leave AGI exactly as it was, so nothing else on your return improves: not the premium tax credit, not an income-driven student loan payment, not the taxable share of Social Security, and not a state return that starts from federal AGI. It is a narrower benefit than an equivalent above-the-line deduction would have been.
When do the OBBBA tax cuts expire?
After tax year 2028. All four provisions apply to tax years 2025 through 2028 and terminate for years beginning after 31 December 2028 unless Congress extends them. Tax year 2025 was the first, filed in early 2026.
The window has practical consequences beyond the arithmetic. A 72-month car loan taken out in 2026 gets three deductible years out of six. And because employers were not required to withhold differently, the benefit has arrived as a refund at filing rather than as larger paychecks — some employers only began using W-2 box 12 codes TP and TT for tax year 2026, after transition relief covered 2025.
Do states tax tips and overtime the same way?
Generally yes, unless a state has legislated otherwise. A state income tax is a separate system, and a new federal deduction only flows through if that state's law conforms to it — which most have not done automatically, particularly for states that start from federal AGI rather than federal taxable income, since all four of these deductions come after AGI.
So a tipped worker in a state with an income tax should assume the state bill is unchanged. Combined with FICA being unchanged, the practical effect is that these provisions reduce one of the three taxes on a tipped or overtime dollar, not all of them.
What this OBBBA calculator doesn't handle
Four provisions in one flow, which means four sets of caveats. The dedicated calculator for each provision carries the full list; these are the ones that matter to the combined number.
- Eligibility is self-certified — The occupation picker, the FLSA checkbox and the single "my vehicle and loan qualify" toggle stand in for tests the IRS applies in detail — 81 named occupations, exempt-status duties tests, and six separate vehicle and loan conditions. The dedicated pages ask more carefully; this one trades precision for a single flow.
- Standard deduction assumed — Taxable income is built as MAGI minus the standard deduction for your filing status. If you itemize, or have above-the-line adjustments, the starting taxable income is different and so is the marginal rate the deductions come off at.
- Excluded taxpayers and occupations — The tips deduction excludes highly compensated employees and specified service trades — health, law, accounting, consulting, athletics, financial services — and caps a self-employed claimant at the net income of the business. None of those tests is applied here.
- Credits, AMT and Social Security taxability — The tax saved is a pure bracket calculation. Credits, the alternative minimum tax, and the combined-income computation that decides how much of a retiree's Social Security is taxable are all outside the model — the last of which is genuinely unaffected by these deductions, but the tax on it isn't shown here.
- One year, 2026 parameters — 2026 brackets and standard deduction throughout. The tips and overtime MAGI thresholds are inflation-adjusted after 2025, and we could not confirm from a primary source whether the $25,000, $12,500, $10,000 and $6,000 caps are indexed — we use the statutory amounts unchanged, which would make our figures slightly conservative if they are.
- FICA and state tax — Federal income tax only, throughout. Tips and overtime remain fully subject to Social Security and Medicare, and state conformity to these federal deductions is a separate question in each of the states that levy an income tax.
- ·IRS — OBBBA tax deductions for working Americans and seniors — The IRS overview of all four deductions, tax years 2025–2028
- ·IRS Schedule 1-A (Form 1040) — Additional Deductions — Tips Part II, overtime Part III, car loan interest Part IV, seniors Part V
- ·IRS Rev. Proc. 2025-32 — 2026 inflation adjustments — Tax year 2026 brackets & standard deduction
Rates, brackets and limits here are checked against primary sources. If a number still looks off, email support@realmoneyiq.com and we'll review and fix it.
RealMoneyIQ provides free educational calculators, not financial, tax, investment or legal advice. Results are estimates based on the assumptions you enter and publicly published rates; your actual outcome will differ. Always confirm decisions with a licensed professional who knows your full situation.