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No Tax on Tips Calculator

Work out your 2026 tip deduction, the phase-out, and how much federal income tax it saves, with the rules on which tips qualify.

Updated November 4, 2026. Free, no sign-up; everything runs in your browser and nothing you type is stored.

No tax on tips calculator (2026)

Filing statusQualified tips this year ($)Total wages including tips ($)Other income ($)Self-employed tipped worker?If self-employed: net profit from that work ($)

Your tip deduction

–

–Federal income tax saved

–Social Security and Medicare on tips

–Phase-out

How the no tax on tips deduction works

From 2025 through 2028 you can deduct up to $25,000 a year of qualified tips (IRS). Qualified tips are voluntary cash or card tips from customers, or shared through a tip pool, in an occupation the IRS lists as customarily receiving tips as of December 31, 2024. Mandatory service charges and automatic gratuities don't count. The deduction is taken on Schedule 1-A, so you get it with the standard deduction or itemizing.

Cap: $25,000 per return (not doubled for couples).
Phase-out: reduced by $100 for each $1,000 of modified AGI over $150,000 ($300,000 joint).
Married couples must file jointly; a valid Social Security number is required.
Self-employed tipped workers can't deduct more than the net income from that work, and specified service businesses (such as health, law, performing arts) are excluded.

Worked example

A single server earns $28,000, of which $18,000 is tips. Taxable income after the $16,100 standard deduction is $11,900; the tip deduction brings it to $0, saving $1,190 of federal income tax. Tips stay in wages, so Social Security and Medicare (7.65%, $1,377) are still due, and earned income for the EITC and child tax credit is unchanged.

Keep a record of your tips

Report all tips to your employer (Form 4070 or your employer's system) so they appear on your W-2; unreported tips can't be shown as qualified and still owe tax. If you also work overtime, see the no tax on overtime calculator; for your paycheck use the bring home pay calculator.

Common questions

How much of my tips are tax free?

Up to $25,000 a year is deductible from federal income tax for 2025 through 2028.

Do I still pay Social Security tax on tips?

Yes, the deduction only reduces income tax.

Do automatic gratuities count?

No, only voluntary tips; mandatory service charges are excluded.

When does the tip deduction phase out?

Above $150,000 of modified AGI ($300,000 joint).

Sources

More paycheck and tax calculators: Military Pay Calculator · Overtime Calculator · Pay Stub Calculator

General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.