What is Schedule 1-A and who uses it?

Schedule 1-A is a new US attachment for 2025 income that records the above the line deductions for qualifying overtime and reported tips. Employees who earned overtime or tips and meet the rules will use it to reduce taxable income. Filers should keep pay stubs, tip reports, and employer statements to support totals.

When is the US federal tax filing deadline for 2025 income?

For most filers, the federal tax filing deadline is April 15, 2026. You can request an automatic extension to October 15, but any tax owed is still due in April. If overtime and tip documentation is incomplete, consider extending rather than filing an error-prone return.

Does “no tax on tips” mean all tips are tax free?

No. The rule allows an above the line deduction for up to $25,000 of qualifying, reported tips on 2025 income. You still must report all tips and keep records. The deduction reduces taxable income, but only up to the cap and subject to eligibility and documentation rules.

How should German companies with US employees prepare?

Brief HR and payroll teams on record needs for overtime and tips, including year-to-date pay stubs and employer verification letters. Update employee communications, verify software can export totals, and set internal review checkpoints before the tax filing deadline. Consider targeted extensions for complex cases to avoid amended returns later.

Global Market Insights

February 21: US Tip and Overtime Deductions Complicate Tax Filings

ByHuzaifa Zahoor February 21, 2026February 21, 2026

As searches for the tax filing deadline surge, German investors are eyeing a United States change that may slow filings and shift spending patterns. For 2025 income, new above the line deductions for tips and overtime arrive, yet many 2025 W-2 forms will not show complete data. A new Schedule 1-A and extra proof raise complexity. We outline the limits, records to keep, and why timing matters for 2026 refunds, US consumer demand, and workloads in tax and payroll services.