2026 paycheck and tax guides
Worked examples for the 2026 rules that change what lands in your bank account. Every figure comes from the same engine as our paycheck calculator.
No Tax on Overtime in 2026: How the Overtime Deduction Works
No tax on overtime is a federal income tax deduction, not an exemption. For 2025 through 2028, workers paid overtime that the Fair Labor Standards Act requires can deduct the premium part of that pay, the "half" in time-and-a-half, up to $12,500 a year ($25,000 on a joint return). The deduction shrinks once income passes $150,000 ($300,000 joint). Social Security and Medicare still apply, and you claim it on Schedule 1-A when you file.
No Tax on Tips in 2026: Who Qualifies and What It Saves
For 2025 through 2028, workers in occupations the IRS lists as customarily tipped can deduct up to $25,000 of qualified tips a year on their federal income tax return. Tips must be voluntary and reported on a W-2, 1099, or Form 4137; mandatory service charges do not count. The deduction phases down above $150,000 of income ($300,000 joint), requires a valid Social Security number, and does not reduce Social Security or Medicare tax.
Bonus Tax Rate 2026: How Bonuses Are Taxed and Withheld
A bonus is taxed as ordinary wages, at the same federal rates as your salary. What differs is withholding: most employers withhold a flat 22% federal rate on bonuses in 2026, or 37% on supplemental pay above one million dollars, plus 7.65% for Social Security and Medicare. On a $5,000 bonus that leaves $3,517.50 before state tax. Your actual rate depends on your bracket, so 22% can be too much or too little.
How to Fill Out the 2026 Form W-4, Step by Step
Form W-4 tells your employer how much federal income tax to withhold. Most single workers with one job only need Step 1 and a signature: on a $75,000 salary that withholds $295.00 per biweekly paycheck, or $7,670 a year. Steps 2 through 4 raise or lower that amount. The 2026 form also lets you account for the new tips, overtime, and senior deductions in Step 4(b), the only way to see those savings before you file.