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Healthcare Provider Update: Healthcare Provider for Northrop Grumman: Northrop Grumman provides various healthcare benefits through multiple providers, including major insurers such as UnitedHealthcare, Aetna (CVS Health), Anthem (Elevance Health), and Cigna. Their offerings include comprehensive health insurance plans, which encompass medical, dental, and vision coverage to address the diverse needs of their employees. Potential Healthcare Cost Increases for Northrop Grumman in 2026: As Northrop Grumman navigates the complex landscape of healthcare costs, employees may face significant increases in their out-of-pocket expenses in 2026. Healthcare premiums are projected to rise sharply, with many states experiencing hikes of over 60%, driven by a combination of escalating medical costs and the potential loss of enhanced federal subsidies. A report from the Kaiser Family Foundation indicates that approximately 92% of ACA marketplace policyholders could see their premiums swell by more than 75%, reflecting the profound impact of regulatory changes and heightened insurer rate demands. This environment calls for proactive planning and financial preparation to mitigate the impending financial challenges associated with healthcare coverage. Click here to learn more
'“Northrop Grumman employees may benefit from reviewing how the new tip deduction rules fit into their broader household planning, as thoughtful preparation can make a meaningful difference,” – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.
'“Northrop Grumman employees can use the new tip deduction rules as a reminder to review their overall income strategy and stay informed as guidance evolves,” – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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How the new “No Tax on Tips” law works for eligible employees.
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Income limits, qualifying occupations, and deduction rules.
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How Northrop Grumman households may evaluate these provisions for planning purposes.
Some Employees May Retain a Greater Share of Their Wages
Eligible employees may deduct up to $25,000 in qualified, voluntary tips from their federal taxable income under a new federal tax rule that took effect on July 4, 2025. 1 Northrop Grumman workers in eligible service-related roles may want to stay informed about these changes.
- The deduction applies to tax years 2025 through 2028.
- Income earned as tips is not taxable up to $25,000, however the deduction phass out for joint filers with Modified Adjusted Gross Income (MAGI) above $300,000 and single filers above $150,000. 2
What Does “No Tax on Tips” Mean?
A new provision under the One Big Beautiful Bill Act called “No Tax on Tips” permits eligible employees to deduct as much as $25,000 in voluntary tips from federal taxable income, provided that IRS qualifications are met. Voluntary tips do not include mandatory service charges.
To qualify, an employee must work in a profession the IRS and Treasury Department define as “customarily and regularly receiving tips.” A preliminary list includes roughly 70 job types, including:
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- Food and beverage service
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- Events and entertainment
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- Guest services and hospitality
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- Home repair and maintenance services
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- Personal services
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- Personal well-being and appearance
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- Recreation and education
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- Delivery and transportation
Health care, sports, and performing arts positions are excluded because these roles are not considered to receive tips regularly.
Did No Tip Tax Pass?
Yes. This provision became law on July 4, 2025 as part of broader federal tax reform, which may interest Northrop Grumman employees with members in eligible occupations.
How Does No Tip Tax Work?
Employees in qualifying roles may deduct up to $25,000 in voluntary tips from gross income. Key points:
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- The deduction phases out for single filers at $150,000 MAGI.
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- It begins phasing out for joint filers at $300,000 MAGI.
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- It applies whether the taxpayer uses the standard deduction or itemizes.
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- It is available from 2025 through 2028.
For example, a restaurant server in the 22% tax bracket who receives $20,000 in qualified voluntary tips may reduce their federal income tax by up to $4,400 if IRS requirements are met. This may be meaningful for households that include Northrop Grumman employees.
When Does Tipping Become Tax-Free?
The deduction begins with the 2025 tax year, meaning eligible employees can claim it when filing their 2025 federal return in early 2026. This timing may matter for Northrop Grumman employees managing household tax considerations.
Does This New Law Make Tips Entirely Tax-Free?
Qualified voluntary tips (up to $25,000) may be deducted from federal taxable income if the employee meets the occupation and MAGI rules. However, employees—including those in Northrop Grumman households—may still owe:
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- State income taxes
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- Local income taxes
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- Social Security and Medicare taxes
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- Taxes on tips in excess of $25,000
Is the No Tax on Tips Rule Limited to Cash Tips?
No. Voluntary tips received by cash, credit card, or tip pool may qualify. Required service charges do not. This distinction is important for Northrop Grumman households with individuals in service-based roles.
How to Make a Deduction Claim
Eligible employees can claim the deduction by referring to IRS instructions:
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1. Report all earnings, including tips, on Form 1040, line 1a.
2. Complete Schedule 1-A, for deductions such as qualified tips and overtime.
3. Report total additional deductions on Form 1040, line 13b.
Employees may deduct only the qualified voluntary tips actually received, up to the $25,000 limit. Northrop Grumman employees should remember that eligible tips must still be properly reported for payroll tax purposes.
More Guidance Is Expected
The IRS and Treasury Department will release additional information. Because each household's situation differs, individuals—including those working at Northrop Grumman—may want to speak with a qualified tax professional for personalized questions.
What Is No Tax on Overtime?
Another provision within the 2025 law allows eligible employees to deduct qualifying overtime pay from federal taxable income—up to $12,500 for single filers or $25,000 for joint filers. 1 The MAGI phase-out thresholds are the same as the tip deduction. This rule also covers 2025 through 2028, which may influence planning for Northrop Grumman households evaluating income timing.
Do You Need Assistance Navigating These New Tax Laws?
The Retirement Group can help Northrop Grumman employees understand how these deductions may influence their retirement planning approach. You can speak with a representative by calling (800) 900-5867 .
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Sources:
1. Internal Revenue Service. “One, Big, Beautiful Bill Provisions.” IRS , 2025, www.irs.gov/newsroom/one-big-beautiful-bill-provisions .
2. Fidelity Investments. “No Tax on Tips: A New Deduction Explained.” Fidelity Learn , 19 Nov. 2025, www.fidelity.com/learning-center/personal-finance/no-tax-on-tips .
3. Lautz, Andrew. “How Does ‘No Tax on Tips’ Work in the One Big Beautiful Bill?” Bipartisan Policy Center , 30 July 2025, bipartisanpolicy.org/explainer/how-does-no-tax-on-tips-work-in-the-one-big-beautiful-bill. Accessed 8 Dec. 2025.
4. “‘No Tax on Tips’ Explained.” TaxSlayer Support , TaxSlayer, 2025, support.taxslayer.com/hc/en-us/articles/40291875700749--No-Tax-on-Tips-Explained. Accessed 8 Dec. 2025.
5. Mahoney, Michael K., and Stephen Kenney. “New IRS Guidance Pinpoints How Individuals May Take Tax Breaks for Tips and Overtime.” Ogletree Deakins , 21 Nov. 2025, ogletree.com/insights-resources/blog-posts/new-irs-guidance-pinpoints-how-individuals-may-take-tax-breaks-for-tips-and-overtime. Accessed 8 Dec. 2025.
How can Northrop Grumman employees effectively maximize their retirement income, and what role do pension plans and personal investments play in this strategy? It's important for employees to understand how components like the Pension Plan Benefits, Savings Plan Benefits, and Social Security Benefits collectively provide a robust retirement framework. This question invites a detailed exploration of how Northrop Grumman's various programs interact, and what actions employees can take to ensure they are optimizing their retirement savings.
Maximizing Retirement Income at Northrop Grumman: Northrop Grumman employees can maximize their retirement income by effectively leveraging the combination of Pension Plan Benefits, Savings Plan Benefits, Social Security Benefits, and Personal Savings and Investments. Each component plays a crucial role: the pension plan provides a defined benefit based on salary and years of service, the savings plan offers a vehicle for tax-advantaged growth through employee and employer contributions, and social security offers a baseline of income adjusted for inflation. Employees should aim to maximize their contributions, particularly to the 401(k) plan, and manage their investments according to their individual retirement timelines and risk tolerance.
What are the different types of retirement benefits available to Northrop Grumman employees, and how do these benefits impact retirement planning? Employees should be aware of the distinctions between defined benefit plans, like the Heritage TRW, and defined contribution plans, such as the 401(k) Savings Plan. This question will allow an in-depth examination of how these benefits function and their significance in the context of Northrop Grumman's overall compensation structure.
Types of Retirement Benefits: Northrop Grumman offers both defined benefit and defined contribution retirement plans. The Heritage TRW Pension Plan, a defined benefit plan, bases pensions on final average earnings and years of service. The 401(k) Savings Plan, a defined contribution plan, allows employees to save and invest with tax advantages, with contributions from both the employee and employer. Understanding these plans' structures and benefits is essential for employees to plan effectively for retirement.
In what ways have recent changes to the Northrop Grumman Pension Program affected employees who are planning to retire in the near future? Understanding the specifics of benefit adjustments or freezing final average earnings will be pivotal for employees' retirement planning. This inquiry will encourage discussion around how these changes influence both current and future retirees regarding their readiness for retirement and their financial planning.
Impact of Recent Changes to Pension Program: Recent changes to the Northrop Grumman Pension Program, such as the freezing of the final average earnings calculation as of December 31, 2014, affect employees planning to retire soon. These changes may alter the expected retirement benefits for some employees, making it crucial for near-retirees to reassess their projected pension benefits under the new rules and plan accordingly to meet their retirement goals.
How do Northrop Grumman employees qualify for early retirement under the current pension plan, and what benefits can they expect? This question should delve into the eligibility criteria for early retirement based on age and years of service, as well as highlight the benefits associated with this option. It provides an opportunity to explore the trade-offs and advantages of opting for early retirement versus working longer.
Early Retirement Qualifications and Benefits: Northrop Grumman employees can qualify for early retirement if they are at least 55 years old with 10 years of vesting service, receiving benefits reduced based on early retirement factors. Understanding these factors and the impact on the retirement benefits can help employees decide the best age to retire to maximize their pension benefits while considering their personal and financial circumstances.
What essential steps should Northrop Grumman employees take to prepare for retirement, including understanding their pension plan and social security benefits? This question can explore the various resources available, such as tools and calculators provided by Northrop Grumman, and the importance of proactive planning. Employees should consider how their decisions today will influence their retirement lifestyle, including the necessity of accumulating both pension and social security benefits.
Preparation Steps for Retirement: Employees should take proactive steps such as utilizing Northrop Grumman’s retirement calculators, attending planning seminars, and consulting with financial advisors available through the Northrop Grumman Benefits Center. It's also important for employees to understand how their pension benefits interact with Social Security and personal savings to create a comprehensive retirement strategy.
What options do Northrop Grumman employees have for managing their savings after retirement, and how can they choose the best strategy for their individual needs? Discussion here can encompass the different methods for drawing down retirement accounts, the importance of balancing withdrawals with ongoing expenses, and considerations for managing longevity risk. It is crucial for retirees to think about how they will provide for themselves throughout their retirement years.
Post-Retirement Savings Management: After retirement, Northrop Grumman employees need to manage their withdrawals from savings plans carefully to sustain their income throughout retirement. Considering factors like withdrawal rates, tax implications, and investment risk will help in maintaining a stable financial status in the retirement years.
How does Northrop Grumman determine the final average earnings (FAE) used in calculating pensions, and what factors should employees consider to impact this calculation positively? This question could lead to a discussion about the significance of high-earning years, the concept that only the top five consecutive earning years count, and how employees can strategically plan their careers to boost their FAE for retirement.
Determining Final Average Earnings (FAE): Northrop Grumman calculates FAE for pension benefits based on the highest five consecutive years of earnings. Employees should aim to maximize their earnings during these peak years, as this will directly increase the pension benefits they receive upon retirement.
What are the specific vesting requirements for Northrop Grumman's pension plans, and why is understanding these concepts critical for employees? As employees may leave the company at various stages of their careers, grasping how vesting works can significantly affect their financial security. This question allows for a detailed discussion on how years of service translate into non-forfeitable benefits.
Understanding Vesting Requirements: Vesting in Northrop Grumman's pension plans requires completing three years of service, after which the benefits earned become non-forfeitable. Employees should be aware of their vesting status, especially if considering changing jobs, as it impacts their eligibility for pension benefits.
How can Northrop Grumman employees effectively utilize the resources available through the Northrop Grumman Benefits Center for their retirement planning needs? This question invites exploration of what tools and guidance are obtainable through the Benefits Center, including contact methods, online resources, and personalized retirement evaluations, allowing employees to make informed decisions about their retirement.
Utilizing Northrop Grumman Benefits Center Resources: The Northrop Grumman Benefits Center offers tools, resources, and support for retirement planning. Employees should frequently use these resources, such as the retirement income calculator and personalized consultations, to plan effectively for their retirement.
How can Northrop Grumman employees find additional information regarding their retirement options and resources, including the most effective ways to contact the Northrop Grumman Benefits Center? With a focus on how to access support and information, this question emphasizes the role of company resources in assisting employees with their retirement strategies.ã€4:4†source】
Finding Retirement Information and Support: Additional information about retirement options and resources can be accessed through Northrop Grumman's Benefits Online portal and the Benefits Center. Employees are encouraged to actively use these channels for up-to-date information and personalized support to navigate their retirement planning effectively.
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