Timeline of the New Tax Deductions: From the 2025 Law to the 2026 and 2027 Rules

Last reviewed November 14, 2026 · Figures checked against official sources · How we verify

In one paragraph: The four deductions were enacted on July 4, 2025 and apply to tax years 2025 through 2028. The IRS issued Schedule 1-A in November 2025, finalized the tipped-occupations regulations on April 10, 2026 (effective June 12, 2026), and finalized car loan interest regulations in September 2026 (effective November 9, 2026). Employers report overtime and tips separately starting with 2026 W-2s.

Key dates

Date	What happened
July 4, 2025	The law (Public Law 119-21) is enacted, creating deductions for qualified tips, qualified overtime, car loan interest and a new $6,000 deduction for seniors, for tax years 2025–2028.
Sept. 22, 2025	Proposed regulations on qualified tips and the tipped-occupations list are published in the Federal Register (90 FR 45340).
Nov. 4, 2025	The IRS creates the 2025 Schedule 1-A (Form 1040), Additional Deductions.
Nov. 21, 2025	IRS Notice 2025-69 provides transition relief for 2025: workers can use alternative ways to figure qualified tips and overtime, and the IRS treats taxpayers in listed occupations as not in a specified service trade or business during the transition.
Apr. 10, 2026	Treasury and the IRS issue final regulations listing occupations that customarily received tips (IR-2026-49), adding visual artists, floral designers and gas pump attendants.
June 12, 2026	The final tips regulations take effect.
Sept. 8, 2026	Final car loan interest regulations (TD 10054) are published in the Federal Register.
Nov. 5, 2026	The IRS announces tax year 2027 inflation adjustments (IR-2026-133, Rev. Proc. 2026-35).
Nov. 9, 2026	The final car loan interest regulations take effect.
Jan. 1, 2027	Washington's minimum wage rises to $17.73 and other states' 2027 increases take effect.
2027 (filing 2026 returns)	2026 Forms W-2 report qualified overtime (box 12, code TT), cash tips (code TP) and the tipped occupation code (box 14b).
Tax year 2028	The last tax year for the four deductions under current law.

What stays the same each year

The caps and phase-out thresholds ($12,500 / $25,000 for overtime, $25,000 for tips, $10,000 for car loan interest, $6,000 for seniors) are set by the statute and are the same for tax years 2025 through 2028. They do not appear in the IRS's 2027 inflation-adjustment guidance (Rev. Proc. 2026-35). What changes year to year is your income, the brackets and the standard deduction (see 2027 tax brackets and 2027 standard deduction), and the paperwork employers use to report the amounts.

What to do now

For a 2025 return, use Schedule 1-A and the IRS instructions.
For 2026, check your W-2 in early 2027 for the new codes. Make sure your employer reported cash tips and your tipped occupation code.
If you bought a new vehicle with a loan, collect your lender's interest statement and the VIN.
Use our calculator to estimate your savings.

Frequently asked questions

Are the new deductions permanent?

No. The IRS says they apply for tax years 2025 through 2028.

Is the law called the One, Big, Beautiful Bill or the Working Families Tax Cuts?

The same law (Public Law 119-21). The IRS pages originally used "One, Big, Beautiful Bill" and some current pages use "Working Families Tax Cuts".

When did the final tips regulations take effect?

The final regulations on occupations that receive tips were released April 10, 2026 and are effective June 12, 2026.

When did the final car loan interest regulations take effect?

The final regulations (TD 10054) were published in the Federal Register on September 8, 2026 and are effective November 9, 2026.

When do employers start reporting overtime and tips separately?

Tax year 2026. The 2026 Form W-2 adds box 12 codes TP (cash tips) and TT (qualified overtime) and box 14b for the Treasury Tipped Occupation Code.

Sources and citations

Every dollar figure on this page was checked against the official pages below on November 14, 2026. If an agency updates its guidance, the agency page controls.