Methodology and sources
Every rule these calculators apply, where it comes from, and how firmly each state entry is evidenced.
The federal calculation
The engine implements IRS Schedule 1-A (Form 1040) directly, in the order the form computes it. The table below maps each rule to the line it comes from, so any figure can be checked against the form itself.
| Rule | Value | Source |
|---|---|---|
| Maximum tip deduction | $25,000 per return — not doubled when filing jointly | Part II, line 7 |
| Maximum overtime deduction | $12,500, or $25,000 filing jointly | Part III, line 15 |
| Qualified overtime | Hours past 40 in an FLSA workweek × 0.5 × the regular rate — the premium only | Part III, line 14a |
| Phase-out threshold | $150,000 MAGI, or $300,000 filing jointly | Lines 9 and 17 |
| Phase-out rate | $100 lost per whole $1,000 above the threshold | Lines 12 and 20 |
| Phase-out rounding | Step count is rounded DOWN to a whole number, so a partial $1,000 costs nothing | Lines 11 and 19 |
| Tips fully phased out | $400,000 single · $550,000 jointly | Derived from lines 7–13 |
| Overtime fully phased out | $275,000 single · $550,000 jointly | Derived from lines 15–21 |
| Filing status | Married filing separately is disqualified from both deductions | Part II and III cautions |
| Payroll taxes | Neither deduction reduces Social Security or Medicare tax | Statutory — income tax only |
A note on the rounding
Lines 11 and 19 instruct you to divide by $1,000 and decrease the result to the next lower whole number — the form’s own examples say to decrease 1.5 to 1 and 0.05 to 0. Part IV of the same form, covering car loan interest, says to increase to the next higher number. The IRS rounds these provisions in opposite directions deliberately, so the two cannot share a formula. We implement each as written.
How the state data was researched
All 51 jurisdictions were researched against primary sources — state revenue department guidance, enacted legislation, and official form instructions — in August 2026. Of those, 47 rest on a primary source and 4 on a reputable secondary source. None are currently unconfirmed.
Each state page shows the source it was checked against and the date of review. Where a state’s treatment cannot be tied to a source, the page says so rather than inferring an answer — on a tax question an admitted gap is more useful than a confident guess.
Why our conformity counts differ from other trackers
Some trackers report roughly nineteen states as having conformed to the tip deduction. We find far fewer where it actually reduces a taxpayer’s bill, because conforming to the Internal Revenue Code in general is not the same as the deduction arriving. Both provisions are below-the-line: they reduce federal taxable income but leave federal AGI unchanged. Most states build their base from federal AGI, so nothing flows through without separate state legislation. See the state pages for the reasoning applied jurisdiction by jurisdiction.
What we do not attempt
We do not compute exact state tax liability. State rate structures, credits and deductions interact in ways a single-purpose calculator would get wrong often enough to be harmful, so the state pages report conformity and mechanism rather than a dollar figure.