Big News: New Tax Deductions for Working Americans — What Creators, Small Businesses, and Professionals Need to Know
At Velin & Associates, Inc., we stay ahead of every tax law update so you don’t have to. If you’re a YouTuber, Shopify store owner, TikToker, filmmaker, Amazon business owner, dentist, tradesperson, or run a small local business in California, here’s a new tax break that could keep more money in your pocket this year.
The One Big Beautiful Bill Act, signed on July 4, 2025, includes two new deductions for working Americans — especially those who work overtime or earn tips.
1. “No Tax on Tips” Deduction (2025–2028)
If you or your staff earn tips, you can now deduct up to $25,000 in tips per year from your taxable income.
Examples:
- A hairstylist at a West Hollywood salon who reports $15,000 in tips can now deduct that income — lowering taxable income and saving money.
- A barber shop owner who works on commission plus tips can deduct their tips too — as long as they report them properly.
- A nail salon paying nail techs who earn daily tips can help employees benefit from this deduction by accurately reporting wages and tips.
- A valet business or hospitality company with staff who rely on tips can educate workers on how to claim this benefit properly.
Key points:
- Must be on the IRS-approved list of tipped jobs (coming late 2025).
- Tips must be reported on W-2s, 1099s, or Form 4137.
- Phases out for high earners ($150,000 individuals/$300,000 couples).
2. “No Tax on Overtime” Deduction (2025–2028)
If you or your employees earn overtime pay, the extra portion you earn for working beyond normal hours is now deductible — up to $12,500 for singles or $25,000 for couples.
Examples:
- A freelance video editor working nights to finish a big project for a YouTuber can deduct the extra overtime portion of their pay.
- An equipment rental company whose staff rack up overtime during busy production shoots can help employees claim this break.
- A construction contractor or electrician who logs extra weekend hours can deduct that “time-and-a-half” premium pay.
- A Shopify store doing big holiday sales might pay staff overtime to pack and ship orders — that extra pay could be deductible for the employee.
Key points:
- Overtime must be reported on W-2s or 1099s.
- Works for both standard deduction and itemized filers.
- Income limits apply ($150,000 single/$300,000 couples).
What Does This Mean for Small Business Owners?
If you run a business that pays workers in tips or overtime, you’ll want to make sure:
- Payroll systems properly track and report tips and overtime.
- Workers know how to claim the new deductions.
- Your CPA helps you structure pay so you and your team can benefit.
Why It Matters for Creators, Freelancers & Small Businesses
These new deductions can mean thousands in savings for:
- YouTubers who hire editors, production crew, or event staff who work long hours.
- Filmmakers with crews earning overtime on shoots.
- Shopify and Amazon businesses who need seasonal help for big sales surges.
- Dental practices whose hygienists or assistants pick up extra shifts.
- Beauty salons and spas that thrive on tips.
Keeping clean records is key — and that’s where we come in.
We’re Here to Help You Keep More of What You Earn
Don’t leave money on the table. At Velin & Associates, Inc., we’re proud to be the trusted:
CPA for YouTubers, CPA for Shopify Stores, CPA for Amazon Sellers, CPA for TikTokers, CPA for Dental Practices, CPA for Filmmakers, and more.
For more information about our services, please visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.