The One Big Beautiful Bill Act (OBBBA) creates a new federal income tax deduction for qualifying overtime wages paid under the Fair Labor Standards Act (FLSA). This means overtime pay received by W-2 employees for hours worked over 40 per week may be excluded from federal taxable income starting in 2026.
Book a Free Call →W-2 employees who receive overtime pay under the FLSA qualify. This includes hourly workers, nurses, tradespeople, construction workers, factory workers, and any employee who receives time-and-a-half for hours worked over 40 per week. Salaried exempt employees who do not receive FLSA overtime do not qualify.
Book a Free Call →No — the overtime deduction applies to FLSA-qualifying overtime paid to W-2 employees. Independent contractors and gig workers do not receive FLSA overtime and do not qualify for this deduction.
Book a Free Call →Savings depend on your total overtime pay and your marginal tax rate. A worker earning $15,000 in overtime at a 22% rate saves $3,300/year. A worker in the 24% bracket saves $3,600/year on the same overtime income.
Book a Free Call →Your employer must correctly report overtime pay on your W-2. IRS guidance on the specific form and line for claiming the deduction is pending. Uncle Kam will ensure the deduction is properly claimed on your 2026 tax return.
Book a Free Call →The One Big Beautiful Bill Act (OBBBA) creates a new deduction allowing workers in tip-based industries to exclude qualifying tip income from federal taxable income. This is one of the most significant new deductions for service industry workers in decades.
A restaurant server earning $20,000/year in tips at a 22% federal rate saves $4,400/year in federal income taxes under the new tip income deduction.
This is a brand-new deduction under the OBBBA — the IRS has not yet issued full guidance. Employers in tip-based industries should update payroll reporting immediately. Self-employed workers who receive tips should consult a tax advisor on how to claim the deduction on Schedule C.
A server at a high-volume restaurant in Miami earned $22,000 in reported tips in 2026. Before the OBBBA, all of that tip income was fully taxable as ordinary income. Under the new tip income deduction, Uncle Kam helped her exclude the qualifying tip income from federal taxable income. At her 22% marginal rate, the $20,000 in qualifying tips generated a $4,400 reduction in federal taxes. Her employer updated payroll reporting to correctly classify tip income, and Uncle Kam ensured the deduction was properly claimed on her return.
Work in a tip-based industry? The new tip income deduction could save you thousands in 2026. Book a call to see how much you qualify for.
Be the Next Win — Book a CallThe One Big Beautiful Bill Act (OBBBA) creates a new federal income tax deduction for qualifying tip income received by workers in tip-based industries. This means tips received by servers, bartenders, hair stylists, delivery drivers, and other service workers may be excluded from federal taxable income starting in 2026.
Workers in industries where tipping is customary qualify, including restaurant and food service workers, hotel and hospitality staff, hair stylists and barbers, nail technicians, delivery drivers, and similar service workers. Tips must be properly reported to the employer on W-2 or 1099 forms.
Yes — tips must still be reported to your employer and on your tax return. The deduction reduces your taxable income, but the reporting requirement remains. Unreported cash tips do not qualify for the deduction and still carry audit risk.
IRS guidance is still pending on self-employed tip income. Workers who receive tips as independent contractors should consult a tax advisor to determine how the deduction applies to their Schedule C income.
Savings depend on your total tip income and your marginal tax rate. A worker earning $20,000 in tips at a 22% rate saves $4,400/year. A worker in the 24% bracket saves $4,800/year on the same tip income.
The One Big Beautiful Bill Act (OBBBA) adds an enhanced $6,000 standard deduction for taxpayers age 65 and older, on top of the regular standard deduction. This is in addition to the existing extra standard deduction for seniors and represents a significant tax reduction for retirees and older Americans.
A married couple both age 65+ in the 22% bracket receive an additional $12,000 in standard deductions ($6,000 each), saving $2,640/year in federal taxes.
This stacks on top of the existing additional standard deduction for seniors ($1,950 single / $1,550 each married). Combined with the regular 2026 standard deduction, seniors 65+ now have one of the largest standard deductions in history. Seniors who previously itemized should recalculate — the standard deduction may now exceed itemized deductions.
A married couple, both age 68, retired in Florida with $80,000 in combined Social Security and pension income. Before the OBBBA, they took the standard deduction plus the existing additional standard deduction for seniors. Under the new law, each spouse qualifies for an additional $6,000 enhanced standard deduction — a combined $12,000 increase. Uncle Kam updated their return to reflect the new deduction. At their 22% marginal rate, the additional $12,000 deduction saved $2,640 in federal taxes in 2026.
Age 65 or older? The new senior standard deduction could save you thousands in 2026. Book a call to make sure you are capturing it.
Be the Next Win — Book a CallThe One Big Beautiful Bill Act (OBBBA) adds an enhanced $6,000 standard deduction for taxpayers age 65 and older, on top of the regular standard deduction and the existing additional standard deduction for seniors. This applies starting in 2026 and represents one of the largest standard deduction increases for seniors in history.
Any taxpayer who is age 65 or older by December 31 of the tax year qualifies, provided they take the standard deduction (not itemizing). Both spouses qualify if both are age 65 or older, effectively doubling the benefit for married couples.
In 2026, a senior age 65+ filing single receives: the regular standard deduction (approximately $15,000) + the existing additional standard deduction for seniors ($1,950) + the new OBBBA enhancement ($6,000) = approximately $22,950 total. A married couple both age 65+ receives approximately $45,900 in total standard deductions.
Many seniors who previously itemized should recalculate in 2026 — the new enhanced standard deduction may now exceed their itemized deductions. Uncle Kam can run both calculations to determine which saves more.
The enhanced standard deduction reduces your taxable income, which may reduce the portion of Social Security benefits subject to federal income tax. This creates a compounding benefit for retirees with moderate income levels.
A tax credit of up to $2,000 per qualifying child under age 17, with up to $1,700 refundable as the Additional Child Tax Credit.
A family with 3 qualifying children receives $6,000 in child tax credits, directly reducing taxes owed dollar-for-dollar.
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If you use your cell phone for business, you can deduct the business-use percentage of your monthly bill, data plan, and the cost of the device itself. For most self-employed professionals, this is 80–100% of the total cost.
A freelancer paying $120/month for their phone and using it 90% for business deducts $1,296/year, saving $389–$518 depending on tax bracket.
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Any supplies you purchase and use in your business are fully deductible in the year purchased. This includes paper, pens, printer ink and toner, folders, binders, postage, envelopes, labels, staples, tape, and any other consumable materials used in your work.
A small business owner spending $1,200/year on office supplies saves $360–$480 in taxes depending on their bracket.
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If you are required to hold a professional license to practice your trade, the cost of obtaining and renewing that license is fully deductible as a business expense. This includes state bar fees for attorneys, medical license renewals, nursing licenses, contractor licenses, real estate licenses, CPA licenses, and any other required professional credentials.
A physician paying $2,500/year in state medical license fees, DEA registration, and board certification renewals saves $750–$1,000 in taxes.
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Continuing education required to maintain your professional license or improve skills in your current trade is fully deductible. This includes CME credits for physicians, CLE credits for attorneys, CPE credits for CPAs, CE credits for nurses, real estate CE, and any other mandatory or voluntary professional development directly related to your current work.
A CPA spending $3,000/year on CPE courses, webinars, and AICPA membership saves $900–$1,200 in taxes.
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Work clothing that is required as a condition of employment and not suitable for everyday wear is fully deductible. For healthcare professionals, this includes scrubs, lab coats, surgical gowns, nursing shoes, compression socks worn for work, and any other required clinical attire. The clothing must be required by your employer or profession and not adaptable to everyday use.
A travel nurse spending $800/year on scrubs, compression socks, and nursing shoes deducts the full amount, saving $240–$320 in taxes.
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Healthcare professionals can deduct the cost of medical supplies and clinical equipment used in their practice. This includes stethoscopes, blood pressure cuffs, otoscopes, diagnostic tools, syringes, gloves, masks, bandages, and any other consumable or durable medical supplies used in patient care. Larger equipment qualifies for Section 179 immediate expensing.
A self-employed nurse practitioner spending $2,000/year on clinical supplies, a new stethoscope, and diagnostic tools deducts the full amount, saving $600–$800.
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Professional liability insurance (malpractice insurance) premiums are fully deductible as a business expense. This applies to all licensed professionals including physicians, dentists, nurses, attorneys, financial advisors, CPAs, architects, and any other professional who carries liability coverage for their practice.
A physician paying $8,000/year in malpractice insurance premiums deducts the full amount, saving $2,400–$3,200 in taxes.
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Tradespeople and contractors can deduct the full cost of tools and equipment used in their business. Small tools (under $2,500) are expensed immediately. Larger equipment qualifies for Section 179 immediate expensing or 100% bonus depreciation. This includes hand tools, power tools, ladders, scaffolding, safety gear, hard hats, work boots, and any other equipment used on the job.
A general contractor spending $5,000/year on tools, safety equipment, and work gear deducts the full amount, saving $1,500–$2,000 in taxes.
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Protective clothing and safety equipment required for your trade or job site is fully deductible. This includes steel-toed work boots, hard hats, safety glasses, hearing protection, gloves, high-visibility vests, respirators, and any other OSHA-required or job-required safety gear. The key test: the gear must be required for the job and not suitable for everyday wear.
A contractor spending $600/year on work boots, gloves, safety glasses, and hard hats deducts the full amount, saving $180–$240 in taxes.
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Most taxpayers leave the QBI deduction unclaimed — it reduces taxable income by up to 23% starting 2026 under the OBBBA.
HSA contributions offer a triple tax advantage — deductible, tax-free growth, tax-free withdrawals.
Charitable donations of appreciated stock avoid capital gains AND generate a full fair-market-value deduction.
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