Answer
No, the tips and overtime deduction provisions in the One Big Beautiful Bill Act (OBBBA) apply only to employees who receive qualified overtime or qualified tips, as defined by federal guidelines.
- Employees who are exempt from overtime are not eligible for the overtime deduction. Overtime eligibility is based on the Fair Labor Standards Act (FLSA), which requires overtime pay for non-exempt employees who work more than 40 hours in a workweek.
- Employees who do not customarily receive voluntary tips are not eligible for the tips deduction. Tip eligibility is based on working in occupations that the IRS has identified as customarily and regularly receiving tips, with some exceptions. The IRS has published a proposed list of qualifying occupations.