No tax on tips calculator
Servers, bartenders, hairstylists and other tipped workers can deduct their reported tips from federal taxable income, up to $25,000 a year.
Enter your tips and income to see your deduction and an estimate of the tax you save.
How it's calculated
- The deduction is your qualified tips, up to $25,000. The cap is the same for single and joint returns.
- If your MAGI is over $150,000 ($300,000 on a joint return), the cap drops by $100 for each full $1,000 over.
- The tax saved is the difference between the tax on your taxable income with and without the deduction.
An example
A server with $12,000 in tips and $28,900 of taxable income deducts all of it and saves $1,440 of federal income tax.
Frequently asked questions
Which tips qualify?
Cash and card tips paid voluntarily by customers in a job the IRS lists as customarily tipped. Mandatory service charges don't count. Tips must be reported on a W-2, a 1099 or Form 4137.
Do I still pay Social Security and Medicare on tips?
Yes. The deduction only lowers federal income tax. Payroll taxes and most state income taxes still apply.
Can married couples filing separately claim it?
No. If you are married, you must file a joint return, and the person who earned the tips needs a valid Social Security number.
Key terms
- Qualified tips
- Voluntary tips received in a customarily tipped occupation and properly reported.
- Schedule 1-A
- The IRS form where you claim the tips, overtime, car loan interest and senior deductions.
Up-to-date official data
Data checked against the official source on .
We check the official sources automatically, every day.
- IRSRev. Proc. 2025-32, inflation adjusted items for 2026
- IRSForm 1040-ES (2026), Estimated Tax for Individuals
- IRSSchedule 1-A (Form 1040), Additional Deductions