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Tax tips: New breaks for seniors and service workers

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Published  March 27, 2026 4:35pm EDT
Personal Finance
FOX 13 News
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The Brief

    • Seniors aged 65 and older can claim a new $6,000 "above-the-line" deduction.
    • Service workers can legally shield up to $25,000 in eligible tips from federal taxes.
    • Taxpayers may have to manually separate out their exempt overtime and tip income if their employer's software hasn't updated.

TAMPA, Fla. - The government added major tax breaks this season targeting senior citizens and service workers. If you were 65 or older in 2025, you can claim an additional $6,000 individual deduction — or $12,000 for a married couple — on top of your standard deduction. This is a new "above-the-line" deduction claimed on the new IRS Schedule 1-A.

Dig deeper:

There is also a new tax break on overtime and tips. The law shields up to $25,000 in eligible tips and up to $12,500 in overtime pay for individuals (or $25,000 in overtime for married couples).

What you can do:

Because the law is new, some employers' payroll software hasn't caught up. Your employer may lump all your income together in Box 1 of your W-2 as fully taxable income. If that happens, it is up to you to pull your final 2025 pay stubs, separate your overtime and tip income, and manually deduct it on Schedule 1-A. Make sure your tax professional or software is updated to reflect this.

The Source: Information comes from recent federal tax legislation creating the Schedule 1-A exemptions for seniors, as well as IRS guidance on tip and overtime income shielding.

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