Now that President Donald Trump signed the bill, workers will be able to deduct up to $25,000 in reported tips and $12,500 in overtime pay from their taxable income on their federal tax returns.

Trump’s new megabill creates temporary deductions for federally taxable tips and qualified overtime pay, but there are some caveats.

Some of the provisions in Republicans’ domestic policy package are effective immediately, while others don’t kick in for several years – notably, after the 2026 midterm elections.