No tax on tips calculator

The 2025-2028 federal deduction for tips: how much of your tips you could take off your taxable income.

This is an estimate of the ceiling, not tax advice. Your real deduction depends on your whole return; ask a tax professional or the IRS.

What the deduction is

For tax years 2025 through 2028, you can deduct up to $25,000 a year of qualified tips from your federal income tax. The deduction lowers your taxable income, so it is not a credit and it is not a refund of the tips themselves.

What counts as qualified tips

• Tips that customers pay of their own free will, in cash or on a card, and tips shared out of a tip pool.
• You must work in an occupation that the IRS listed as one that customarily and regularly receives tips on 31 December 2024.
• The tips must be reported: on your W-2 or 1099, or on Form 4137.

Who can take it

You can take it whether or not you itemize. The deduction shrinks once your modified adjusted gross income is above $150,000, or $300,000 if you file a joint return. The IRS publishes the details of how it shrinks; this page doesn't guess at it.

What it does not change

It does not remove Social Security or Medicare (FICA) tax. You pay that on your tips as before, so keep reporting every tip to your employer.

Source: IRS, tax deductions for working Americans and seniors. Rules can change; check the IRS page for the current ones.

Keeping the numbers

The deduction only works if your tips are on record. Sidework's year card adds up your cash and card tips for the year under its own no tax on tips card, and a spreadsheet export hands every shift to your tax preparer.