OBBBA Calc

No Tax on Tips Calculator

Enter your tips for the year, and any mandatory service charges inside that total, which are taken out because only voluntary tips qualify. The cap is $25,000 per tax return, not per person, and the deduction phases out over $150,000 of MAGI ($300,000 on a joint return). US federal, tax years 2025 to 2028. Check your occupation first if you have not already.

Only tips the customer paid voluntarily count. If your total includes mandatory service charges (an automatic large-party charge, for example), put them in the second box and they are taken out for you. Anything a customer adds above a mandatory charge stays in. Not sure your occupation qualifies? Run the occupation checker first.

Your tips deduction estimate

Qualified tips-
Estimated deduction-

How the tips deduction is calculated

Deduction = the smaller of your qualified tips or $25,000, reduced by $100 for every full $1,000 of MAGI over $150,000 ($300,000 if married filing jointly), following Schedule 1-A, Part II. Qualified tips are cash tips (including card tips) paid voluntarily by the customer in a listed occupation. Mandatory service charges are not tips; anything a customer adds above a mandatory charge is. Tips are claimed from W-2 box 7, Form 4137, or, for a trade or business, from 1099-NEC box 1, 1099-MISC box 3 or 1099-K box 1a up to net profit. Sources: IRS Schedule 1-A (PDF) and T.D. 10044 (final tips regulations).

Worked examples

Server under the cap

$20,000 of qualified tips, single, MAGI $100,000.

Deduction $20,000

Two earners, one cap

$40,000 of combined tips on a joint return.

Deduction capped at $25,000 per return

Phase-out example

$25,000 of tips, single, MAGI $200,000.

Reduction 50 x $100 = $5,000, deduction $20,000

Frequently asked questions

Are mandatory service charges deductible as tips?
No. An automatic charge the customer must pay, like an 18 percent large-party gratuity, is not a qualified tip. If the customer adds anything above it voluntarily, that extra amount is.
Do pooled tips count?
Yes, the share properly allocated to you counts. One exception: amounts a manager or supervisor receives through a tip pool do not qualify for them, though a direct tip they earn serving in a listed occupation can.
Can married filing separately filers claim it?
No. If you are married, you must file jointly to claim the tips deduction.

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Disclaimer: Estimate only. US federal deductions, tax years 2025 to 2028. This calculator is not tax advice.

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