Foreign Earned Income Exclusion

For 2025, the maximum foreign earned income exclusion is $130,000.

Qualified Overtime Compensation (No Tax on Overtime)

The following provision changed due to H.R. 1, One Big Beautiful Bill Act:

Allows a deduction of up to $12,500 ($25,000 in the case of a joint return) of qualified overtime income received for the taxable year. The allowable deduction is reduced if the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). Qualified overtime compensation is defined as overtime paid to an individual whose occupation is covered by the Fair Labor Standards Act of 1938 (FLSA). Only the overtime amount which exceeds the regular rate of pay is eligible for the deduction.

No deduction allowed if taxpayer does not include a valid SSN on the return. If married, taxpayer must file a joint return to claim deduction. Deduction is allowed to non-itemizers. (Qualified Overtime Compensation is out-of-scope until further rules are approved by Treasury and IRS.)

No Tax on Tips

The following provision changed due to H.R. 1, One Big Beautiful Bill Act:

Deduction is allowed for an amount equal to qualified tip income received during the taxable year that are included on statements furnished to the taxpayer. Qualified tips means cash tips received by an individual in occupations where tips are customary. The allowed deduction for any taxable year cannot exceed $25,000. The allowable deduction is reduced if MAGI exceeds $150,000 ($300,000 if MFJ).

No deduction is allowed if taxpayer does not include a valid SSN on the tax return. If married, taxpayers must file a joint return to claim the deduction. The deduction is allowed to non-itemizers. (No tax on tips is out-of-scope until final rules are approved by Treasury and IRS.)