No tax on tips calculator
Put in the tips on your W-2 or 1099. See how much you can deduct and the federal income tax you keep.
- Up to $25,000 of tips a year, on a single or joint return.
- Cash and card tips you report, in a job on the IRS tipped list.
- For tips received in 2025 through 2028, claimed when you file.
How no tax on tips works
Your tips are still reported and still go on your W-2 or 1099. When you file, you subtract up to $25,000 of them from your taxable income on Schedule 1-A. You don't need to itemize.
The deduction cuts federal income tax only. Social Security and Medicare are still owed on every tip, and most states still tax them.
| What counts | Tips the customer chooses to give, in cash or on a card, and tips shared with you by coworkers. They must be reported on a W-2, 1099 or Form 4137. |
|---|---|
| What doesn't | Mandatory service charges, like an automatic 20% added for large parties. Those are wages. |
| Yearly limit | $25,000 per return, single or joint. |
| Income limit | Shrinks by $100 for each $1,000 of modified adjusted gross income over $150,000 ($300,000 joint). |
| Married couples | Must file a joint return. Married filing separately gets no deduction. |
| Self-employed | Can claim it, up to the net profit of the business where the tips were earned. Not available in specified service fields such as health, law, accounting, consulting, financial services, athletics and performing arts, and not for employees whose employer is in one of those fields. |
Jobs on the tipped occupations list
Treasury lists about 70 occupations where people customarily received tips before 2025. These are some of them; check the IRS list for yours.
Food and drink
- Bartenders
- Waiters and waitresses
- Hosts and hostesses
- Dining room and cafeteria attendants
- Baristas and counter workers
Hotels and events
- Hotel housekeepers
- Bellhops and baggage porters
- Concierges
- Casino dealers
- Musicians, singers and DJs
Personal care
- Barbers and hairstylists
- Manicurists and pedicurists
- Massage therapists
- Makeup artists
- Tattoo artists
On the road
- Rideshare and taxi drivers
- Delivery drivers
- Valet attendants
- Movers
- Tour guides
What the deduction doesn't change
The law is called no tax on tips, but tips are still taxed in three ways.
Social Security and Medicare
The 7.65% payroll tax still applies to all reported tips. Unreported tips can't be deducted at all.
Reporting your tips
You still report tips to your employer, and starting in 2026 your W-2 shows them along with your tipped occupation.
State income tax
Most states still tax tips, including California. Check with your state's revenue department.
Questions people ask
How does no tax on tips work?
You deduct up to $25,000 of qualified tips from your taxable income when you file. Tips are still reported and still owe Social Security and Medicare tax; the deduction lowers your federal income tax and is claimed on Schedule 1-A, with or without itemizing.
When does no tax on tips start?
It covers tips received in tax years 2025 through 2028. Tips from 2026 are claimed on the return you file in early 2027.
Did no tax on tips pass?
Yes. It became law on July 4, 2025, as part of the One Big Beautiful Bill Act, now section 224 of the Internal Revenue Code.
Who is eligible?
Employees and self-employed workers in occupations the IRS lists as customarily receiving tips before 2025, such as bartenders, servers, hairstylists, hotel staff, valets and rideshare and delivery drivers. You need a Social Security number valid for work, and married couples must file jointly.
Do automatic service charges count?
No. Only tips the customer chooses to pay, in cash or by card, and tips shared with you by coworkers count. A mandatory service charge added to the bill is wages, not a qualified tip.
Is there an income limit?
Yes. The deduction shrinks by $100 for every $1,000 of modified adjusted gross income above $150,000, or $300,000 on a joint return.