W-2 paychecks & overtime
OBBBA changes that matter to nurses
What the 2025 tax law (OBBBA) changed for nurses
The changes, in one table
| Provision | Details | Relevance to nurses |
|---|---|---|
| No tax on overtime | 2025–2028. Deduct the FLSA-required premium portion of overtime, up to $12,500 ($25,000 MFJ). Reduced above $150k MAGI ($300k MFJ). Overtime is still subject to FICA. | High. Hourly RNs are generally FLSA overtime-eligible. |
| W-2 employee expenses | OBBBA §70110 made the disallowance permanent. | Scrubs, CEUs, license renewals, and work mileage aren't deductible against W-2 income. |
| No tax on tips | Up to $25,000, 2025–2028. | Generally not relevant to nurses: tips must be in a customarily tipped occupation, and SSTB businesses (including health) are excluded. |
| Standard deduction made permanent and increased | $15,750 single (2025), $16,100 (2026) | Applies if you don't itemize |
| SALT cap | $40,000 (2025), $40,400 (2026). Phase-down above $500k/$505k MAGI. | Only matters if you itemize. |
| Charitable deduction for non-itemizers | From 2026: up to $1,000 ($2,000 MFJ) of cash gifts to qualifying charities. | Small but real if you give |
| Car loan interest deduction | 2025–2028: up to $10,000. New, U.S.-assembled personal vehicle, loan originated after 2024. Phases out above $100k MAGI. | Only with a qualifying new-car loan |
| QBI deduction made permanent | Plus wider phase-in and $400 minimum | Applies to 1099 income |
| §127 educational assistance | Up to $5,250/yr tax-free, made permanent (OBBBA §70412); can include student-loan payments | Depends on the employer offering it |
| HSA expansions | From 2026, bronze and catastrophic plans count as HSA-compatible. | If buying marketplace coverage |
Sources
- IRS: Working Families Tax Cuts, individuals and workershttps://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers
- IRS: Working Families Tax Cuts overviewhttps://www.irs.gov/newsroom/working-families-tax-cuts
- IRS FS-2026-13, Qualified overtime FAQshttps://www.irs.gov/pub/taxpros/fs-2026-13.pdf
- IRS Notice 2026-10https://www.irs.gov/pub/irs-drop/n-26-10.pdf
- Rev. Proc. 2025-32 (2026 inflation adjustments)https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- IRS QBI deduction pagehttps://www.irs.gov/newsroom/qualified-business-income-deduction
Research, not tax advice. Confirm with a CPA or EA before filing.