KSHB 41 reporter Grant Stephens covers downtown Kansas City, Missouri. He also focuses on stories of consumer interest. Share your story idea with Grant.
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Changes to taxes on tips, overtime pay and senior deductions could create unexpected hurdles while filing this year's taxes.
Alan Becker, a financial expert with RSG Investments in the Kansas City metro, says understanding the specifics is crucial to maximizing your gains.
There are three big changes to keep in mind, starting with tips. While the "no tax on tips" rule does not eliminate all taxes on tips, a big chunk — specifically voluntary tips — can be deducted from your taxes.
“Everybody is really curious about what's changed, how it's going to affect them," Becker said. “These changes ... they're gonna increase your take-home pay for many Americans. But the real issue isn't whether taxes go down; it's whether you adjust your financial plan accordingly so cash flow improves. Long-term strategy still matters.”
The deduction would only count the portion of tips you actually received, and only voluntary tips apply. An automatic 18% gratuity on a bill for large parties gets treated as regular wages and isn’t eligible for the deduction.
Another update focuses on an overtime deduction that could boost earnings, but there is a catch in how the benefit applies. The update focuses on the difference between your regular hourly rate and your overtime rate.
“The overtime specifically, I think, that's one of the best benefits,” Becker said. "It's going to help that blue-collar worker a lot, but it's only on the overtime. So let's say your base wage is $20, and overtime you get $30. It's only the $10 of overtime, and you're still going to count the wage you're still paying taxes on it. So your take-home will increase, but you will still have to keep the records.”
This means accurate tracking is essential. You must document every hour of overtime and its rate to claim the benefit.
For seniors, a higher standard deduction could help stretch Social Security and retirement income. Retirees could see new breathing room in their budgets this tax season thanks to an increased standard deduction.
“Let's talk about seniors for a second," Becker said. "They get an additional standard deduction... The Social Security additional deduction gives seniors more capacity to be able to enjoy their golden years.”
The additional deduction means seniors can shield more income from taxation. There is a $6,000 deduction if you are 65 and up, potentially reducing what you owe and freeing up cash for living expenses or retirement plans.
If you are considering part-time work or adjusting benefits, this could influence decisions about when and how to draw Social Security. Offsetting taxable income makes this a valuable tool in retirement strategy, especially as costs rise.
Becker shared a final point to keep in mind as you plan for your future.
"So a lot of the benefits that we're talking about on the 'Big Beautiful Bill' are not permanent," Becker said. "They're only going for about three years. So this is a time to work with your advisor to ... make sure the juice is worth the squeeze. Is the deduction or the benefit going to be the most beneficial?"
If you have questions about filing your taxes or any other consumer-related story, send an email directly to Grant Stephens at grant.stephens@kshb.com.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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