Congress passed the One Big Beautiful Bill in 2025. It includes new tax breaks that directly affect workers in Orlando and across Florida. The two biggest changes are a deduction for tip income and a deduction for overtime pay. If you received tips or overtime in 2025, this law could significantly lower what you owe. Here is what changed and how it affects your return.
What Is the Tip Income Deduction?
Starting with the 2025 tax year, workers who receive tips in occupations that traditionally rely on tips can deduct up to $25,000 in tip income per year. This applies to restaurant workers, bartenders, hotel staff, valets, and other service workers. The deduction phases out at higher incomes but applies to most workers who depend on tips for a significant part of their pay. Your employer still reports tips to the IRS, but you can now deduct them.
What Is the Overtime Pay Deduction?
Overtime pay for hourly workers is now partially deductible under the new law. Workers can deduct up to $12,500 in overtime wages from their taxable income ($25,000 for married couples filing jointly). This deduction also phases out at higher income levels. For an Orlando warehouse worker or healthcare aide who works overtime regularly, this could mean hundreds of dollars back at tax time.
Who Qualifies for These New Deductions?
Both deductions have income limits. If your total income is above a certain threshold, the deductions phase out and eventually disappear. The specific numbers depend on your filing status. Single filers start to see the phase-out at $150,000 in adjusted gross income. Married filing jointly, the phase-out starts at $300,000. Most Orlando service workers and hourly employees will qualify in full.
Do These Deductions Affect How Much Is Withheld From My Paycheck?
Not automatically. Your employer withholds taxes based on your W-4 form, not the new law. That means many workers will still have too much withheld throughout 2025 and will get a refund when they file. To adjust withholding mid-year, you need to file a new W-4 with your employer. A tax professional can calculate the right withholding amount so you are not over-paying all year.
What Else Did the Big Beautiful Bill Change?
The law also extended several provisions from the 2017 Tax Cuts and Jobs Act that were set to expire. This includes the higher standard deduction, the child tax credit, and the small business pass-through deduction. If you were worried about your taxes going up in 2026, most of those increases were canceled by this bill.
Get the Most Out of the New Tax Law in Orlando
The new deductions require proper documentation. Tip income must be properly reported. Overtime pay must be separated from regular pay on your return. Tax & Crypto Resolutions files returns for workers across Central Florida and will make sure you claim every benefit this new law provides. Call (407) 412-5645 or visit us at 2200 S Orange Blossom Trail Unit 2, Orlando.
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