Tax Year 2026Updated July 13, 2026
OBBBA Deduction Phase-Out Calculator 2026: All Four Deductions
This calculator models how MAGI-based phase-outs reduce all four OBBBA deductions simultaneously: tips (10% above $150,000 single / $300,000 MFJ), overtime (same thresholds), senior bonus (6% above $75,000 / $150,000), and SALT cap (30% above $505,000 with $10,000 floor).
Phase-Out Rules by Deduction
1. Tips Deduction (IRC §224)
- Cap: $25,000 per year
- Phase-out threshold: $150,000 (single/HoH) / $300,000 (MFJ)
- Phase-out rate: 10% of MAGI above threshold ($100 per $1,000)
- Fully phased out at: $400,000 (single) / $550,000 (MFJ)
- MFS: Ineligible
2. Overtime Deduction (IRC §225)
- Cap: $12,500 (single/HoH) / $25,000 (MFJ)
- Phase-out threshold: $150,000 (single/HoH) / $300,000 (MFJ)
- Phase-out rate: 10% of MAGI above threshold
- Fully phased out at: $275,000 (single) / $550,000 (MFJ)
- MFS: Ineligible. Only the premium portion of OT pay is deductible.
3. Senior Bonus Deduction (§70103)
- Amount: $6,000 per qualifying individual age 65+
- Phase-out threshold: $75,000 (single/HoH) / $150,000 (MFJ)
- Phase-out rate: 6% of MAGI above threshold
- Fully phased out at: $175,000 (single) / $250,000 (MFJ)
- MFS: Ineligible. SSN required (ITIN filers ineligible).
- Stacks with the regular additional standard deduction for age 65+ (which is never phased out).
4. SALT Cap
- Cap: $40,400 (all statuses except MFS: $20,200)
- Phase-down begins at: $505,000 AGI
- Reduction rate: 30% of MAGI excess over $505,000
- Floor: $10,000 ($5,000 MFS) - full phase-down at ~$606,333 AGI
Worked Examples at Different MAGI Levels
Example 1: MAGI $100,000, Single, Age 70
Tips: Below $150,000 threshold, full cap $25,000
Overtime: Below threshold, full cap $12,500
Senior bonus: Excess = $100,000 − $75,000 = $25,000 , reduction = $25,000 × 6% = $1,500.00 , net bonus: $4,500.00
SALT cap: Below $505,000, full cap $40,400
Overtime: Below threshold, full cap $12,500
Senior bonus: Excess = $100,000 − $75,000 = $25,000 , reduction = $25,000 × 6% = $1,500.00 , net bonus: $4,500.00
SALT cap: Below $505,000, full cap $40,400
Example 2: MAGI $200,000, Single, Age 70
Tips: Excess = $200,000 − $150,000 = $50,000 , reduction = $5,000.00, effective cap: $20,000
Overtime: Excess = $50,000 , reduction = $5,000.00, effective cap: $7,500
Senior bonus: Excess = $125,000 , reduction = $6,000.00 , net bonus: $0.00 (fully phased out)
SALT cap: Below $505,000, full cap $40,400
Overtime: Excess = $50,000 , reduction = $5,000.00, effective cap: $7,500
Senior bonus: Excess = $125,000 , reduction = $6,000.00 , net bonus: $0.00 (fully phased out)
SALT cap: Below $505,000, full cap $40,400
Example 3: MAGI $400,000, MFJ, Age 70
Tips: Excess = $400,000 − $300,000 = $100,000 , reduction = $10,000.00, effective cap: $15,000
Overtime: Excess = $100,000 , reduction = $10,000.00, effective cap: $15,000
Senior bonus: MFJ threshold = $150,000 , excess = $250,000 , reduction = $6,000.00 , net bonus: $0.00
SALT cap: Below $505,000, full cap $40,400
Overtime: Excess = $100,000 , reduction = $10,000.00, effective cap: $15,000
Senior bonus: MFJ threshold = $150,000 , excess = $250,000 , reduction = $6,000.00 , net bonus: $0.00
SALT cap: Below $505,000, full cap $40,400
Frequently Asked Questions
What are the four OBBBA deductions?
The OBBBA created four key tax provisions: (1) Tips deduction (IRC §224) - up to $25,000 of qualified tips. (2) Overtime deduction (IRC §225) - up to $12,500 single/$25,000 MFJ of overtime premium. (3) Senior bonus deduction (§70103) - $6,000 additional deduction for age 65+. (4) SALT cap increase - raised to $40,400 from the previous $10,000 cap.
Do tips and overtime have the same phase-out rules?
Yes. Both the tips and overtime deductions share the same phase-out thresholds and rate: $150,000 (single/HoH) or $300,000 (MFJ), with a 10% reduction rate. For every $1,000 of MAGI above the threshold, the cap drops by $100.
How is the senior bonus phase-out different?
The senior bonus has lower thresholds and a different rate compared to tips/OT: $75,000 (single/HoH) or $150,000 (MFJ), with a 6% reduction rate. The $6,000 bonus is fully eliminated at $175,000 (single) or $250,000 (MFJ).
How does the SALT cap phase-down work?
The $40,400 SALT cap begins to phase down when AGI exceeds $505,000. The cap reduces by 30% of the MAGI excess over $505,000. The cap cannot go below $10,000 ($5,000 MFS). Full phase-down occurs at approximately $606,333 AGI.
Can I claim all four deductions at once?
Yes, if you qualify. The tips and overtime deductions are above-the-line (Schedule 1-A), the senior bonus increases your standard deduction, and SALT is an itemized deduction (Schedule A). Note that you cannot claim SALT if you take the standard deduction. Tips, overtime, and the senior bonus stack with the standard deduction.
Are Married Filing Separately filers eligible?
No - MFS filers are completely ineligible for the tips deduction, overtime deduction, and senior bonus deduction. The SALT cap still applies to MFS filers, though at a reduced cap.
When do these provisions expire?
The tips deduction, overtime deduction, and senior bonus are effective for tax years 2025 through 2028. The SALT cap increase follows a separate schedule under the OBBBA.
Can state taxes be reduced by these deductions?
Only in states that conform to the federal OBBBA provisions. Conforming states automatically allow the tips and overtime deductions on the state return. States that decouple from federal law may not offer the same benefit. Check your state's OBBBA conformity status.