Now that President Donald Trump signed the bill, workers will be able to deduct up to $25,000 in reported tips and $12,500 in overtime pay from their taxable income on their federal tax returns.

Trump’s new megabill creates temporary deductions for federally taxable tips and qualified overtime pay, but there are some caveats.

Millions of U.S. workers who earn tips and overtime pay may be eligible for a federal tax break when they file their 2025 income taxes next year