No Tax on Tips Calculator

New for 2025 to 2028. Deduct up to $25,000 of tips from your federal income. See your savings in seconds.

Tips you expect to earn this year ($)

Filing status

Total income for the year (MAGI, $)

Your tax bracket

How the tips deduction works

The law lets you deduct qualified tips from your federal taxable income. The cap is $25,000 per return. It applies for tax years 2025 through 2028. You can claim it even if you take the standard deduction. You claim it on Schedule 1-A.

What counts as a qualified tip

The tip must be paid voluntarily by the customer. Cash tips, card tips, and tips from tip pools all count. Your job must be on the IRS list of tipped occupations. The list covers servers, bartenders, delivery drivers, salon workers, and many more.

The income phase out

The deduction shrinks if your income is high. It drops by $100 for every $1,000 of income above $150,000. For married couples the limit is $300,000. Below those amounts you get the full deduction.

Important limits

This is an income tax deduction only. You still pay Social Security and Medicare tax on your tips. Your employer still reports the tips on your W-2. You still report all tips to your employer as before.

This tool gives a simple estimate for planning. It is not tax advice. Rules have details that depend on your situation. Confirm with a tax professional or IRS.gov before filing.