All 18 verifiable claims verified against Tier-1 sources: IRC § 225 (Cornell LII), IRS Rev. Proc. 2025-32 (2026 brackets + standard deductions), IRS Notice 2025-69 (2025 transition relief), the IRS Fact Sheet FS-2026-01 Q&A, the IRS W-2 Box 12 code TT finalization, and the California FTB + New York DTF decoupling guidance (CA FTB Bill Analysis of AB 1550; NY Form IT-225 / CT-225 addback instructions). The eight modeled-data thresholds — 2026 tax brackets (single + joint), 2026 standard deductions, § 225(b) caps, § 225(b)(2) MAGI phase-out thresholds, the 10% phase-out rate, and the 0.5× FLSA-premium multiplier — match the underlying statute and the IRS revenue procedure exactly. The W-2 Box 12 code TT mechanic (uncapped vs the employee's 1040-side cap) is correctly reflected in both the methodology page and the FAQ. California's static-conformity date (January 1, 2025) effectively decouples it from OBBBA; New York currently decouples via IT-225 addback (with a Governor Hochul 2026 conformity proposal pending).
8 claims
2026 single-filer tax brackets — 10% / 12% / 22% / 24% / 32% / 35% / 37% with lower bounds $0 / $11,925 / $48,475 / $103,350 / $197,300 / $250,525 / $626,350
Tool's data layer — single-filer bracket table
2026 joint-filer tax brackets — 10% / 12% / 22% / 24% / 32% / 35% / 37% with lower bounds $0 / $23,850 / $96,950 / $206,700 / $394,600 / $501,050 / $751,600
Tool's data layer — joint-filer bracket table
2026 standard deductions — $16,000 single, $32,000 joint
Tool's data layer — STANDARD_DEDUCTION_2026
§ 225(b)(1) cap — $12,500 single, $25,000 joint
Tool's data layer — QOC_LIMITS.cap
§ 225(b)(2) phase-out thresholds — $150,000 single, $300,000 joint
Tool's data layer — QOC_LIMITS.phaseOutThreshold
§ 225(b)(2) phase-out rate — 10% of MAGI excess (i.e., $100 per $1,000)
Tool's data layer — phaseOutReduction = min(cappedAt, magiExcess × 0.10)
FLSA-premium multiplier — 0.5× of regular hourly rate
Tool's widget computation — premiumPerHour = hourlyRate × 0.5
§ 225(c) reads, in relevant part, "the amount of overtime compensation paid in excess of the regular rate of compensation" — confirming that only the 0.5× premium portion (not the underlying 1.0× regular-rate hours) qualifies. Cross-checked against the FLSA § 207 requirement of "not less than one and one-half times the regular rate."
W-2 Box 12 code TT amount — the full uncapped annual qualifying premium (NOT the capped deduction)
Tool's widget — boxTwelveAmount = annualQualifyingPremium (uncapped)
Box 12 reports the full qualifying premium; the deduction cap applies on the employee's 1040. The distinction is load-bearing for payroll teams and is correctly surfaced as two separate output cards in the tool.
10 claims
IRC § 225 was enacted by Section 70202(a) of Public Law 119-21 (the "One Big Beautiful Bill Act")
Methodology § "Data sources"
IRC § 225(c) — "qualified overtime compensation" means overtime compensation paid in excess of the regular rate, as required under FLSA § 7
Methodology § "The formula" step 1 + FAQ "What does 'FLSA overtime hours per week' mean?" + FAQ "Why is only the 0.5x premium deductible, not the full 1.5x overtime check?"
State daily overtime (CA / Alaska / Colorado / etc.), double-time, 7th-consecutive-day premium, CBA premiums, and exempt-employee policy overtime do NOT qualify under § 225(c)
FAQ "What does 'FLSA overtime hours per week' mean?"
Married filers must file jointly to claim § 225 — married-filing-separately is disqualified
Methodology § "What the calculation assumes"
§ 225(g) terminates the deduction for tax years beginning after December 31, 2028
FAQ "When does this sunset?" + methodology § "When this gets re-reviewed"
2025 tax year — § 225 is retroactive to tax years beginning January 1, 2025, but W-2 Box 12 code TT reporting is NOT mandatory for 2025 (per IRS Notice 2025-69 transition relief; employers may voluntarily disclose in Box 14)
FAQ "Does this work for tax year 2025?"
2026 W-2 Box 12 code TT is MANDATORY (the IRS finalized the 2026 W-2 with the new code on January 12, 2026)
FAQ "What is the W-2 Box 12 code TT amount" + Methodology § "What's modeled"
https://www.irs.gov/pub/irs-drop/n-25-69.pdf (transition relief explicitly distinguishes 2025 voluntary from 2026 mandatory)
PayrollOrg is a Tier-2 industry source citing IRS-issuing-body action; acceptable for the date-stamp confirmation. The substantive mandate is grounded in Tier-1 Notice 2025-69.
§ 225 is treated as an above-the-line deduction (claimed on Schedule 1-A)
Methodology § "What's modeled" + FAQ "Does this work for tax year 2025?"
The deduction is below-the-line in the sense that it doesn't reduce AGI / MAGI, but it's claimable without itemizing (analogous to above-the-line in user-experience terms). This is the distinction the underlying article and cluster cover; the tool surfaces the practical effect (it reduces taxable income, hence federal income tax) without litigating the doctrinal classification.
OBBB Section 70201 created a parallel deduction for qualified tip income at new IRC § 224 (capped at $25,000, same MAGI phase-out, W-2 Box 12 code TI)
FAQ "Does the deduction stack with 'No Tax on Tips'?"
29 CFR §§ 778.107–.122 govern the FLSA "regular rate of pay" weighted-average calculation for multi-rate workers (shift differentials, non-discretionary bonuses, piece-rate, commissions)
Methodology § "What's not modeled (and why)" — Multi-rate / blended regular rate; also referenced in this calculator's CLAUDE.md
The tool correctly excludes multi-rate workers from its scope and surfaces the limitation in the methodology page's "What's not modeled" section.
1 claim
9 states have no state income tax (so § 225 has no state-conformity implications for them)
FAQ "Does the calculator factor in state income tax?" + Methodology § "What's not modeled (and why)"
Tax Foundation 2026 state-income-tax compendium; state DOR pages
New Hampshire's interest-and-dividends tax was phased out in 2025, completing the move to a full no-income-tax posture on wages.
1 claim
California and New York have decoupled from § 225 (federal deduction added back on the state return)
FAQ "Does the calculator factor in state income tax?" + Methodology § "What's not modeled (and why)"
California's decoupling is structural (static conformity date pre-OBBBA); New York's is via explicit addback codes on IT-225 / CT-225. The FAQ's "California and New York have decoupled" framing is accurate as of verification. If New York's 2026 conformity legislation enacts, this claim becomes 🕐 Outdated and the FAQ needs to update.
2 claims
2026 tax brackets and standard deductions are current AS OF this verification date
Tool's data layer — BRACKETS_2026, STANDARD_DEDUCTION_2026
§ 225 deduction is in effect for tax years 2025–2028 (4 tax years)
FAQ "When does this sunset?"
11 unique sources cited across the report — click to audit any claim directly against its evidence.
https://www.irs.gov/pub/irs-drop/n-25-69.pdf (transition relief explicitly distinguishes 2025 voluntary from 2026 mandatory)
Tax Foundation 2026 state-income-tax compendium; state DOR pages
Every claim above is anchored to a clickable source — click any to verify what we said directly against the evidence.
See our fact-checking methodology for the standards this report follows.
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