Working Families Tax Cuts Savings Estimator

This estimator adds up the four temporary deductions created by the Working Families Tax Cuts — qualified tips (up to $25,000), qualified overtime (up to $12,500, or $25,000 joint), car loan interest (up to $10,000), and the senior deduction ($6,000 per person 65+) — applies each one's income phase-out, and multiplies the total by your marginal rate to estimate federal income tax savings for any year from 2025 through 2028.

This estimator is for informational purposes only. Its results are planning estimates, not the figures that will appear on your return, which are computed on IRS Schedule 1-A.

What to enter

If you are unsure about any single deduction, run its dedicated calculator first: tips, overtime, car loan interest, or senior. Each one asks more detailed eligibility questions than this combined tool.

How each deduction is calculated

The estimator follows the structure of Schedule 1-A. Every part starts from the same MAGI (line 3), but the thresholds, rates, and rounding differ:

In each of the first three parts, the official worksheet caps your actual amount first and then subtracts the reduction from that capped amount. The senior part computes one reduced amount and allows it once for each qualifying spouse. Line 38 adds the four results, and the total goes on Form 1040 line 13b.

Estimated savings = total deduction × marginal rate. If any line of the estimate differs from what you get by working the Schedule 1-A steps by hand, use the Schedule 1-A figure.

Five households, worked through

All examples use 2026 rules: the standard deduction ($16,100 single, $32,200 joint, $24,150 head of household), the extra $2,050 or $1,650 per person for age 65, and the 2026 tax brackets.

How the trickier rows work

The nurse's car loan. She paid $4,200 of interest, but her MAGI is $18,000 over the $100,000 threshold, which is 18 units of $1,000. The reduction is 18 × $200 = $3,600, leaving $600. Her overtime, by contrast, is untouched because its threshold is $150,000. Taxable income before the new deductions is $118,000 − $24,150 = $93,850, inside the 22% head-of-household bracket, so savings are $9,600 × 22% = $2,112.

The retired couple. Both spouses are 65 or older and MAGI is below $150,000, so each gets $6,000. Their regular deductions are $32,200 + 2 × $1,650 = $35,500, leaving $99,500 of taxable income before the new deductions — the top of the 12% joint bracket, which ends at $100,800. The whole $14,900 comes off 12% income: $1,788.

The two-earner couple. At $210,000 of joint MAGI, tips and overtime are below the $300,000 threshold and stay whole. The car loan is $10,000 over $200,000: 10 units × $200 = $2,000 off $5,100 of interest, leaving $3,100. The 65-year-old spouse's senior deduction is $6,000 − 6% × $60,000 = $2,400. Taxable income drops from $176,150 to $141,650, all in the 22% joint bracket, so savings are $34,500 × 22% = $7,590.

As income rises, which deduction disappears first?

Because the four phase-outs start at different incomes and run at different speeds, a raise or a one-time income spike affects them in a predictable order. For a single filer:

For joint filers, shift the senior band to $150,000–$250,000, the car loan band to $200,000–$249,000, and the tips and overtime bands to start at $300,000; the maximum tips or overtime amount is fully phased out at $550,000.

Two practical consequences follow. First, a retiree with a new car loan can lose both of those deductions in the $100,000–$150,000 range while a working household with tips or overtime loses nothing there. Second, a pre-tax 401(k) or HSA contribution that lowers MAGI is worth more than usual inside these bands, because it raises one or more of the deductions at the same time it lowers taxable income.

Reading your result

• Each row is the estimated deduction after that provision's phase-out. A zero means the input was zero, an eligibility answer was "No," or MAGI wiped it out.
• Combined total is the estimate for Schedule 1-A line 38.
• Estimated savings assumes every dollar is deducted at your marginal rate. If the deductions pull your taxable income below a bracket boundary, part of the savings comes at the lower rate and the true figure is somewhat smaller.

What the combined estimate leaves out

• Payroll taxes. None of these deductions reduces Social Security or Medicare tax, or self-employment tax.
• The self-employed tip limit. If you earn tips as a contractor, your tip deduction cannot exceed the net profit of that business. The tips calculator applies this limit; this tool does not.
• Detailed eligibility. The car loan question bundles five separate tests, and the senior deduction requires a Social Security number valid for employment. Married couples must file jointly for every deduction except car loan interest.
• Interaction with other credits. Lower taxable income can change some credits and the alternative minimum tax. A full return, or the federal tax bracket calculator, shows the complete effect.
• State income tax. These are federal deductions; your state may not follow them.

Using the estimate

Because the deductions reduce what you owe at filing, many households will see them as a larger refund. If your combined deduction is large, you can collect it through your paychecks instead by updating Form W-4 or your estimated payments; the tax withholding calculator shows the per-paycheck change. Rerun the estimate whenever your MAGI changes significantly — a bonus, a Roth conversion, or a large capital gain can shrink the senior and car loan deductions well before it affects tips or overtime.

For a plain-English overview of every provision in the law, read Working Families Tax Cuts explained. The detailed rules for each deduction are in the guides to no tax on tips, car loan interest, and the senior deduction.