No tax on tips calculator (2025–2028)

Work out your qualified tips deduction: the $25,000 cap, the $150,000 / $300,000 MAGI phase-out and the self-employed net-profit limit, exactly as on Schedule 1-A.

Figures last checked 21 Oct 2026

Estimates only, not tax advice. Results are for general information. Your actual tax depends on your full return; check with the IRS or a qualified tax professional.

Usually Form W-2 box 7 (social security tips) plus any tips you reported on Form 4137.
Tips received as a self-employed worker, for example shown on Form 1099-K or in your tip log.
Modified adjusted gross income. For most people this is the adjusted gross income (AGI) on Form 1040 (line 11b on the 2025 form). Add back any foreign earned income or Puerto Rico income you excluded.
Enter your numbers to see the estimate.

Who can claim the no tax on tips deduction

  • Years: tax years 2025 through 2028.
  • Who: employees and self-employed people who receive qualified tips in an occupation the IRS lists as customarily and regularly receiving tips on or before 31 December 2024 (see the IRS list of tipped occupations).
  • What counts: voluntary cash or charged tips from customers, including shared tips. The tips must be reported on a Form W-2, Form 1099, another statement furnished to you, or on Form 4137.
  • Not eligible: self-employed people in a specified service trade or business (SSTB) under section 199A, and employees of an employer in an SSTB. (For 2025 the IRS gave some transition relief here in Notice 2025-69.)
  • You need a valid Social Security number on the return, and if you are married you must file jointly.
  • You can claim it whether you itemize or take the standard deduction.

How the deduction is calculated (Schedule 1-A, Part II)

  1. Add your qualified tips as an employee and your qualified tips from self-employment (the self-employment part cannot be more than that business's net profit).
  2. Take the smaller of that total and $25,000.
  3. If your MAGI is over $150,000 ($300,000 if married filing jointly), divide the excess by $1,000 and round down to a whole number.
  4. Multiply that number by $100 and subtract it. The result (not below zero) is your deduction.

Because of this, the full $25,000 is phased out at MAGI of $400,000 for single filers and $550,000 for joint filers.

Worked example: server, single, MAGI $162,500

Qualified tips (W-2 box 7)$32,000
Capped at $25,000$25,000
MAGI over $150,000$12,500
Full $1,000s: 12 × $100− $1,200
Deduction$23,800

IRS examples (IR-2025-114)

  • Ann, a restaurant server, has $18,000 of social security tips in box 7 of her 2025 Form W-2 and nothing on Form 4137. She can use $18,000 as her qualified tips.
  • Bob, a bartender, reported $20,000 of tips to his employer on Forms 4070 (his W-2 box 7 shows $15,000) and $4,000 of unreported tips on Form 4137. He can use either $15,000 or $20,000, plus the $4,000.
  • Doug, a self-employed travel guide, received $7,000 of tips through a payment app. His Form 1099-K does not separate tips, but his daily tip log does, so he can use $7,000.

The deduction lowers your federal income tax. It is entered on Schedule 1-A; nothing in the IRS guidance cited here changes how Social Security and Medicare taxes are figured on tips.

Frequently asked questions

Is the tips deduction $25,000 for married couples too?

Yes. Schedule 1-A uses one $25,000 limit per return. Only the income threshold is higher for joint filers ($300,000 instead of $150,000).

Can I take it with the standard deduction?

Yes. It is available whether you itemize or not.

Do tips added automatically to a bill count?

Only voluntary tips count. A charge the customer cannot refuse or negotiate is not a qualified tip. The IRS instructions for Schedule 1-A give examples.

I'm married filing separately. Can I claim it?

No. If you are married you must file a joint return to claim this deduction.

How long does it last?

Tax years 2025 through 2028 under current law.

Is my data stored?

No. The calculation runs in your browser.

Official sources

Every figure on this page was checked against these official pages on 21 Oct 2026.