No tax on tips calculator
Up to $25,000 of qualified tips is deductible, if your occupation is on the Treasury list.
Two cases
$18,000 of tips on $46,000 of income filing single: all of it under the cap and well under the threshold, so the deduction is $18,000, worth about $2,150 against federal income tax.
$31,000 of tips on $88,000 filing jointly: capped at $25,000, no phase-out at that income, so the deduction is $25,000 and worth about $3,000.
The joint return does not double this cap. Unlike the overtime deduction, which goes from $12,500 to $25,000 on a joint return, the tips cap stays at $25,000 however you file.
Which occupations qualify
Treasury published a final list of 71 occupations that customarily and regularly received tips on or before 31 December 2024. It was finalised in April 2026 and is codified at 26 CFR 1.224-1(i). The list is exhaustive: if your occupation code is not on it, the deduction is not available, although the examples given under each code are illustrative rather than limiting.
The codes run from 101 to 810 across eight groups: beverage and food service, entertainment and events, hospitality and guest services, home services, personal services, personal appearance and wellness, recreation and instruction, and transportation and delivery. Visual artists, floral designers and gas pump attendants were added when the rules were finalised.
What counts as a qualified tip
Voluntary cash and charged tips qualify, including amounts received through tip sharing, where they are reported on a W-2, a 1099, another furnished statement, or Form 4137. A mandatory service charge is not voluntary and is not a tip.
Tips earned in a specified service trade or business are excluded. The regulations on that exclusion are still reserved, and transition relief currently treats someone in a listed occupation as not being in such a business until regulations arrive.
Self-employed people can claim this one, unlike the overtime deduction, limited to the net income of the business the tips came from.
Common questions
- How much of my tips can I deduct?
- Up to $25,000 of qualified tips, reduced by $100 for every full $1,000 of modified AGI above $150,000, or $300,000 on a joint return.
- Is the tips cap doubled if I file jointly?
- No. It stays at $25,000 per return. Only the overtime cap doubles on a joint return.
- Which jobs are on the list?
- 71 occupations across eight categories, codes 101 to 810, finalised in April 2026 and set out at 26 CFR 1.224-1(i). The list is exhaustive.
- Does it reduce Social Security and Medicare?
- No. Tips remain wages for FICA, and the regulations state plainly that this deduction does not apply for employment tax or self-employment tax purposes.