What's an OBBBA tip / overtime exclusion?

The One Big Beautiful Bill Act (OBBBA) created a federal-tax exclusion for qualified tip income and qualified overtime compensation, subject to income phaseouts. The estimator applies the exclusion before computing taxable income.

What's the senior bonus?

OBBBA created an additional standard deduction add-on for taxpayers aged 65+, on top of the existing extra standard deduction.

Does the estimator handle two W-2s?

Yes — including the Social Security wage-base double-withholding refund that gets reconciled on Schedule 3 of the 1040.

Are state and local tax included?

All 50 states plus DC, with NYC, Philadelphia, and Detroit local income tax overlays.

W-2 Federal + State Income Tax Estimator

Estimate only — covers ~85% of simple W-2 tax lives. Federal + state + local + FICA + EITC + Saver's Credit. NOT supported: self-employment income (1099-NEC), rental property, Schedule C, Schedule E, AMT, foreign income, ISOs/RSUs, sale of primary home, K-1 income, multiple-state earners. Tip/overtime treatment under OBBBA applies to 2025+ tax years for qualifying occupations and is subject to per-worker caps and IRS occupation lists. For those situations, use a CPA, TurboTax, IRS Free File, or one of our specialized tools.

STAGE 1 OF 6

Household & ages

Filing status, ages (for the 65+ extra standard deduction and the new OBBBA senior bonus), and dependents (for CTC and ODC). Defaults model a typical single-earner married household.

Filing status

MFJ = married filing jointly. MFS = married filing separately (rare; usually worse outcome). HoH = head of household (unmarried with a qualifying dependent). QW = qualifying surviving spouse (widow(er) with dependent child, up to 2 years after spouse's death — uses MFJ brackets).

Your age (end of tax year)

Drives the 65+ additional standard deduction and the new OBBBA $4,000 senior bonus deduction (under-AGI-threshold). If you're 65 or older, the tool adds these automatically.

Spouse age (if MFJ or QW)

Only used if filing status is MFJ. If your spouse is also 65+, both partners get the 65+ extra standard deduction and (subject to AGI phaseout) both qualify for the senior bonus.

Filers who are legally blind

0, 1 (you), or 2 (you + spouse). Each blind filer adds the same extra-standard-deduction bump as a 65+ filer ($1,650 single/HoH or $1,300 each MFJ/QW/MFS for 2026, verify).

Number of dependents under 17 (CTC-eligible)

Each child under 17 with a valid SSN qualifies for the $2,000 Child Tax Credit. Phaseout begins at AGI $400K MFJ / $200K single. Up to $1,700 (estimated 2026) per child is refundable as ACTC.

Number of other dependents (ODC-eligible)

Dependents who don't qualify for CTC (age 17+, parents you support, qualifying relatives). Each one earns the $500 non-refundable Other Dependent Credit, same phaseout as CTC.

STAGE 2 OF 6

W-2 wages — primary, second job, spouse

Enter your primary W-2 Box 1 wages, then any second W-2 (a side job, or a spouse's W-2 if MFJ). Tips and overtime are entered separately because they're no longer subject to federal income tax under OBBBA (2025-2028, qualifying workers, with caps).

Your primary W-2

W-2 Box 1 wages (regular)

The number on Box 1 of your W-2 — federal taxable wages. This already excludes pre-tax 401(k), pre-tax health, FSA, HSA-by-payroll, etc. Exclude any tips or overtime you'll report separately below to avoid double-counting.

YTD federal income tax withheld — primary (W-2 Box 2)

From your most recent W-2 Box 2 or paystub. Lets the tool tell you whether you'll get a refund or owe. Leave 0 to skip.

Reported tip income — primary W-2 (OBBBA-excluded)

Tips reported on your W-2 (typically Box 7) for qualifying tipped occupations (restaurant servers, bartenders, valet, hair stylists, etc. — IRS publishes a list). Under OBBBA (2025-2028), federal income tax does NOT apply to qualifying tips, subject to a per-worker cap. FICA still applies. Enter what was actually reported as tips.

Qualifying overtime — primary W-2 (OBBBA-excluded)

The "half" portion of time-and-a-half pay (i.e., the overtime premium itself, not the base hours) for FLSA-covered overtime. Under OBBBA (2025-2028) the premium portion is federally income-tax-free up to a per-worker cap. FICA still applies. Most paystubs show OT separately.

State income tax withheld — primary W-2 (Box 17)

Optional. From W-2 Box 17. Used to flag state-withholding shortfalls >$1,000 once state tax is computed in Stage 5.

Second W-2 — spouse W-2 (MFJ) or your second job

Two W-2s is the #1 source of under-withholding errors. Each W-2's withholding is computed as if it's the only income — so two jobs at $60K each get withheld as if each is a $60K job (low bracket), but you actually owe at the $120K bracket. The tool will flag the gap below.

Second W-2 Box 1 wages

Spouse's regular W-2 Box 1 wages (MFJ), or your own second-job W-2. Set 0 if no second W-2.

YTD federal income tax withheld — second W-2

From the second W-2's Box 2. Combined with primary withholding to compute refund-or-owe.

Reported tips — second W-2 (OBBBA-excluded)

Tips on the second W-2 for qualifying tipped occupations.

Qualifying overtime — second W-2 (OBBBA-excluded)

FLSA overtime premium on the second W-2.

State income tax withheld — second W-2 (Box 17)

Optional. From the second W-2's Box 17.

OBBBA tip & overtime exclusion — caveat. The "no tax on tips" and "no tax on overtime" provisions are real but narrow. The IRS publishes a list of qualifying tipped occupations; non-listed tipped jobs don't qualify. There are per-worker dollar caps (around $25K tips / $12.5K OT per filer — single, ~2× for MFJ — final IRS guidance pending). FICA (Social Security + Medicare) still applies. State income tax treatment varies. This tool gives you a clean upper-bound estimate; check IRS Publication 535 / your accountant for occupation eligibility before filing.

STAGE 3 OF 6

1099 investment income (interest, dividends, cap gains)

The "simple investing" reader: a brokerage account, an HYSA, maybe a few dividend funds and a winning sale. Enter the 1099-INT, 1099-DIV, and 1099-B totals — the tool will tax qualified dividends and long-term capital gains at the preferential 0% / 15% / 20% rates and the rest at ordinary income rates.

1099-INT interest income (taxable)

Bank/HYSA/CD interest, brokerage cash interest, corporate bond interest. Excluded: tax-exempt municipal bond interest (enter separately below for AMT/state purposes if you want a fuller picture; not modeled here).

1099-DIV ordinary dividends (non-qualified)

Non-qualified dividends — REIT distributions, dividends held <60 days, some foreign. Taxed at ordinary income rates. From 1099-DIV Box 1a minus Box 1b.

1099-DIV qualified dividends

Qualified dividends — domestic and qualifying foreign corp dividends held >60 days. From 1099-DIV Box 1b. Taxed at preferential 0% / 15% / 20% rates based on your taxable-income bracket.

1099-B long-term capital gains (net)

Net long-term capital gains (held >1 year). From 1099-B / Schedule D summary. Taxed at 0% / 15% / 20% based on your taxable-income bracket. Losses (negative) can offset gains.

1099-B short-term capital gains (net)

Net short-term capital gains (held <1 year). Taxed at ordinary income rates. Losses (negative) offset gains.

Other ordinary taxable income

Taxable state-refund add-back, unemployment compensation, gambling winnings, prizes, jury duty, alimony from pre-2019 divorces. Anything that lands as ordinary income on Schedule 1 and isn't covered above.

STAGE 4 OF 6

Pre-tax & above-the-line deductions

These items either reduce W-2 Box 1 wages (pre-tax 401(k), health, FSA) or are subtracted from gross income to compute AGI (HSA outside payroll, student loan interest, traditional IRA, educator expenses). Most pre-tax items are already netted out of your W-2 Box 1 — but use the Roth/Traditional 401(k) split below to model the choice.

401(k) / 403(b) / 457 — Traditional vs Roth split

Traditional (pre-tax) 401(k) contributions — additional

Pre-tax 401(k) that is NOT already netted out of W-2 Box 1. Box 1 normally already excludes elective deferrals you made; leave 0 unless you want to model "what if I contributed more". Reduces current-year taxable income at your marginal rate.

Roth 401(k) contributions (your annual total)

Roth 401(k) contributions are made with AFTER-tax dollars — they do NOT reduce current AGI but grow tax-free and withdraw tax-free in retirement. Entered separately because Roth contributions are already in your Box 1 wages (no current deduction). The tool uses this to show the Roth-vs-Traditional cost/benefit footnote.

Roth vs Traditional rule of thumb: Traditional saves you tax NOW at your current marginal rate, but you'll pay ordinary income tax on every dollar withdrawn in retirement. Roth costs you nothing today (you've already paid tax on the contribution), but the entire balance — original + growth — comes out tax-free. Pick Traditional if you expect to be in a LOWER bracket in retirement. Pick Roth if you expect to be in the SAME or a HIGHER bracket, or if you want bracket diversification. Many young earners use Roth; many late-career high earners switch to Traditional.

Other pre-tax payroll items

Pre-tax health / FSA / HSA via payroll (NOT already in Box 1)

Box 1 normally already excludes these. Leave 0 unless modeling before-payroll. Includes employer-side health insurance premiums paid by your contribution, dependent care FSA, medical FSA, HSA contributions via payroll.

Educator expenses (K-12 teachers)

If you're a K-12 teacher, $300 per filer ($600 MFJ if both are teachers) above-the-line. Tool caps automatically.

HSA outside payroll (above-the-line)

Do you have an HDHP (HSA-eligible high-deductible health plan)?

An HSA contribution is only deductible if you're enrolled in an HDHP. Check this if your health plan qualifies — your insurance card or HR will tell you.

HSA contributions made OUTSIDE payroll

HSA contributions you made personally (not through payroll) — these are above-the-line deductions on Schedule 1. 2026 estimated HSA limits: $4,400 self / $8,750 family + $1,000 catch-up if 55+ verify 2026. Tool caps automatically based on your HDHP coverage and age.

Other above-the-line

Student loan interest paid (Schedule 1)

Above-the-line deduction up to $2,500 per return. Phaseout begins around MAGI $85K single / $170K MFJ verify 2026. Tool caps at $2,500 and phases out automatically.

Traditional IRA contributions (deductible portion)

2026 estimated IRA limit: $7,000 ($8,000 if 50+) verify 2026. Deductibility phases out if you (or spouse) are covered by a workplace plan and income is above limits — this tool does not apply that phaseout. Verify deductibility against IRS Pub 590-A before filing.

STAGE 5 OF 6

State (50 + DC) and local income tax

Most W-2 households pay more total tax to their state and (sometimes) city than they realize. Pick your state of residence. Nine states have no income tax on W-2 wages (FL, TX, TN, NH, NV, SD, WA, AK, WY) — the tool will return $0 state tax for those. Otherwise it applies the state's 2026 brackets (or flat rate) and the state standard deduction.

State of residence

All 50 states + DC. The tool uses 2026 brackets and flat rates where published, 2025 otherwise (flagged). High-tax states (CA, NY, NJ, OR, HI) are computed to graduated-bracket accuracy with the state standard deduction; flat-rate states (IL, PA, IN, MI, NC, KY, MA, NH-interest, CO, UT, AZ, ID) use the published rate.

Add a local tax estimate?

If you live or work in NYC, Philadelphia, Detroit, or another major-city local tax jurisdiction, check yes and pick your city below. Local rates are flat (mostly) but stack on top of state tax.

State tax caveats. State income tax rules differ significantly: some states (CA, NY, NJ) have graduated brackets with their own standard deductions; flat-rate states (IL, PA, MI, IN, NC) are simpler. Some states conform to federal AGI; others have add-backs (e.g., for muni bond interest from out-of-state issuers). Some states tax tips and overtime even though OBBBA excludes them federally — this tool taxes federal AGI at the state level by default, so OBBBA exclusions flow through unless your state has decoupled. State tax brackets shown for 2026 where published, 2025 otherwise verify 2026. Multi-state earners (work in one state, live in another) are NOT modeled — use a CPA.

STAGE 6 OF 6 · YOUR ESTIMATE

Your estimated federal + state income tax

Rates & take-home

Step-by-step waterfall

Notable observations

What-if comparisons

What if I contributed $X more to my 401(k)?

Pre-tax 401(k) reduces taxable wages dollar-for-dollar — at your marginal rate, every extra $1,000 saves you tax now (and grows tax-deferred for retirement).

Add to 401(k): $

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What if I'm 65+ next year?

Turning 65 unlocks the additional standard deduction AND (subject to AGI phaseout) the new OBBBA $4,000 senior bonus. Shows the tax saving if everything else stays equal.

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PAIRS WITH

W-4 Withholding Estimator

This tool tells you what tax you'll owe at year-end. The W-4 Withholding Estimator tells you whether your current per-paycheck withholding matches — and exactly what to write on Step 4(c) to land near zero in April. Run both. Open W-4 estimator →

FROM TAX STRATEGY DECODED

A W-2 tax estimate is one minute of work. The real opportunity is the year-long planning.

401(k) sizing · Roth-vs-traditional choice · HSA triple-tax-advantage · bunching charitable gifts into a DAF year · bracket-fill Roth conversions · the OBBBA senior bonus · tip/OT occupation strategy · the mid-year W-4 reset. The math is in the chapter; the tool is here.

Federal brackets and standard deduction reflect 2026 statutory amounts where final; items marked [verify 2026] are best estimates pending IRS publication of final indexing. State income tax brackets reflect each state's 2026 published figures where available, 2025 otherwise. The model assumes the standard deduction (does not itemize), applies the preferential 0/15/20% LTCG & qualified-dividend stack at the federal level only (states tax all gains at ordinary rates by default), and does not separately model: AMT, NIIT 3.8%, QBI, self-employment tax, premium tax credit reconciliation, supplemental wage withholding flat rate, multi-state allocation, or state-level decoupling from federal OBBBA tip/OT exclusions. Additional Medicare 0.9% above $200K single / $250K MFJ wages IS included. EITC and Saver's Credit are estimated linearly from IRS phase-in/phase-out tables. The OBBBA tip and overtime exclusions are modeled as a federal-income-tax exclusion (FICA still applies); per-worker caps and IRS qualifying-occupation lists are not enforced — for occupation eligibility, see IRS guidance or your accountant. This is not tax advice. For full filing use TurboTax, an accountant, or IRS Free File.

A straightforward W-2 federal + state tax estimate. Standard deduction. OBBBA-aware.