Deductions Most People Miss That Could Boost Your Paycheck by $200 a Month

Core Insights - Many individuals may be missing out on potential monthly income by not adjusting their tax withholding, with the IRS offering new deductions that could increase take-home pay by $200 or more each month [1][2] - The average tax refund in 2025 was $3,116, equating to approximately $260 per month that could have been utilized throughout the year [2] - Adjusting the W-4 form can lead to an increase in monthly take-home pay by $150 to $300, depending on income and tax bracket [3] Tax Withholding Adjustments - Individuals who received large tax refunds effectively provided the government with an interest-free loan, highlighting the importance of updating withholding [2] - The IRS Tax Withholding Estimator is a free tool that helps calculate the correct withholding amount, allowing individuals to submit a new W-4 form to their employer [2] New Deductions - The One Big Beautiful Bill Act introduced temporary deductions valid until 2028, which can be accounted for directly on the W-4 form [4] - The Qualified Tip Income Deduction allows workers in tipping occupations to deduct up to $25,000 from their taxable income, with specific income thresholds for phase-out [5] - For individuals in the 22% tax bracket earning $20,000 in tips, this deduction can save $4,400 in federal taxes, translating to about $367 in additional monthly take-home pay [6] Overtime Pay Deductions - The Qualified Overtime Pay Deduction permits workers earning overtime to deduct the premium portion of their overtime pay, specifically for those earning time-and-a-half [7]