TaxBreakCalc
2025–2028 Updated 2026-06-22

No Tax on Tips Calculator

See your federal income-tax savings on tips, up to $25,000, with the cap and phase-out applied.

$
Your tax savings
$3,300/yr
≈ $275 per month back in your pocket
Qualified tips$15,000
Cap$25,000
Your deduction$15,000
Bracket22%
Under the $150,000 single cutoff, the full deduction applies.
FICA still applies to tip income.
Estimate only
How this estimate is built ›

How your savings is calculated

1.qualified tips = your reported cash + credit/debit tips (from a listed occupation)
2.deduction = min(qualified tips, $25,000), the same cap single or MFJ
3.apply MAGI phase-out ($150k/$300k → $0 at $275k/$550k)
4.your savings = deduction × your tax bracket
FICA still applies here. Social Security and Medicare tax are still owed on your tip income, because this deduction is income-tax only.

Do your tips qualify?

Likely qualifies
Cash and credit/debit tips reported on your W-2 from a traditionally tipped occupation. That covers servers, bartenders, bellhops, valets, hairstylists, and 70+ IRS-listed occupations.
Check carefully
Tips from a specified service trade or business (SSTB) are excluded. Unreported tips don’t count. Self-employed tip income may qualify with limits.

Ready to file? Compare tax software

You computed your tip deduction. These support the OBBBA tip line on your return.

TurboTax
Guided OBBBA interview. Best for full-service filers.
FreeTaxUSA
Free federal e-file. Good for DIY filers on a budget.
TaxSlayer
Tiered plans; supports tip and overtime entry.

Affiliate disclosure: we may earn a commission at no cost to you.

Common questions

How much of my tips are tax-free in 2026?

You can deduct up to $25,000 of qualified tip income, the same cap single or MFJ. It lowers taxable income. It does not make all tips tax-free.

Which tips count as "qualified"?

Cash and credit/debit tips reported on your Form W-2 (or 1099/Form 4137) from a traditionally tipped occupation. The IRS final regulations list 70+ qualifying occupations.

Are all tips tax-free now?

No. It is an income-tax deduction, capped at $25,000 and phased out at higher incomes. FICA taxes (6.2% and 1.45%) still apply in full.

Who qualifies for no tax on tips?

Workers in traditionally tipped occupations qualify, the 70-plus jobs the IRS lists, such as servers, bartenders, and hairstylists. Tips must be reported on a W-2, 1099, or Form 4137.

What is the income limit for no tax on tips?

The tip deduction phases out above $150,000 MAGI for single filers and $300,000 for married filing jointly, under the 2025 OBBBA rules.

How do I claim the no-tax-on-tips deduction?

You claim it as a deduction on your federal income tax return. Your tips must be reported on a W-2, 1099, or Form 4137, and the IRS is giving 2025 transition relief while it finalizes the reporting.

When does the no tax on tips start and end?

Tax years 2025 through 2028. It sunsets after 2028 unless Congress extends it.

Related calculators

No Tax on Overtime
$12,500 / $25,000 MFJ
Child Tax Credit
$2,200 / child
HSA Contribution
$4,400 / $8,750

Sourced to IRS FS-2026-01, IRS IR-2026-49, and OBBBA P.L. 119-21. Verified 2026-06-22, pending CPA sign-off.