Tools / No Tax on Tips calculator

The rules in one minute

• You can deduct up to $25,000 of qualified tips a year, for tax years 2025 through 2028. The cap is per return, so a married couple filing jointly shares one $25,000 cap.
• The deduction shrinks by $100 for every full $1,000 of modified AGI over $150,000 ($300,000 if married filing jointly).
• Married couples must file jointly to claim it, and you need a valid Social Security number.
• Tips must be voluntary, in an occupation on the IRS list of tipped occupations, and reported on a W-2, 1099 or Form 4137. Automatic service charges don't count.
• You take it on Schedule 1-A whether or not you itemize.
• It lowers federal income tax only. Tips you report are still subject to Social Security and Medicare tax.

Self-employed tipped workers

If you earn tips as a contractor, the deduction can't be more than your net profit from that work, figured before the deduction. For 2026 the tips also have to be reported to you on a 1099 (the new tip boxes on Forms 1099-NEC, 1099-MISC and 1099-K), so cash a client hands you with no form behind it doesn't count. The law also shuts out specified service businesses, but until January 1 of the year after the IRS issues final rules on that, workers in a listed tipped occupation are treated as not being in one. More in No Tax on Tips for the self-employed.

How the savings are figured

The calculator works out your 2026 federal income tax twice, with and without the deduction, using the 2026 brackets and the standard deduction, and shows the difference. It assumes the rest of your income is wages and that you have no dependents. The full walkthrough is in our No Tax on Tips guide, and the tip tax calculator shows your whole tax bill, state included.

Track it all with Cashout. Shifts, tips, unpaid breaks, taxes, and mileage, logged in seconds. iPhone · Android