Married filing separately cannot claim this deduction at all
Modified adjusted gross income, before this deduction
Only jobs that customarily and regularly received tips before 2025 qualify
Which occupations are on the list?
Cash and charged tips, including tip-shares you received
Tips deduction
$0
Estimate for reference only, not verified proof — check the sources below, and their access date, before relying on this for a claim or filing.
- Statutory cap
- $25,000
- Estimated tax savings
- $0
- Deduction reaches $0 at this MAGI
- —
Available only for tax years 2025 through 2028. If you're self-employed, the deduction is also limited to your net income from the tip-earning business — not modelled here.
No tax on tips calculator
Work out your federal deduction on tips for 2025–2028, whether your job qualifies, and where the income limit shrinks it.
The 2025 tax law lets workers in occupations that customarily received tips before 2025 deduct up to $25,000 of qualified tips a year from federal income tax through 2028. The deduction shrinks by $100 for every $1,000 your MAGI is over $150,000 ($300,000 married filing jointly), reaching $0 at $400,000 (single) or $550,000 (joint). Married filing separately cannot claim it at any income.
Reviewed by RuleCost Editorial Team. Rules for 2026, updated 18 Sept 2026.
How to use it
- 1Choose your filing status. Married filing separately gets nothing from this deduction at any income — the law requires a joint return.
- 2Enter your expected MAGI for the year, before this deduction.
- 3Say whether your occupation is on the Treasury list of jobs that customarily and regularly received tips before 2025 — the deduction is $0 if it isn't, regardless of how much you were actually tipped.
- 4Enter your qualified tips for the year — cash and charged tips, including your share of pooled tips.
How this calculator works
Three checks decide the deduction, in order.
Filing status. Married filing separately gets $0 at any income — the statute requires a joint return. Every other status is eligible.
Occupation. Only jobs on the Treasury list of occupations that customarily and regularly received tips before 2025 qualify. This is a hard gate, not a factor: being tipped in a non-qualifying job gives $0, no matter the amount.
The phase-out. The $25,000 cap drops $100 for every $1,000 of MAGI over $150,000 (single) or $300,000 (joint) — a step, not a smooth taper. Your deduction is the smaller of that phased cap and the tips you actually received.
A worked example
Single filer, qualifying occupation, no other adjustments.
| MAGI | Qualified tips | Deduction | Estimated tax saved |
|---|---|---|---|
| $35,000 | $10,000 | $10,000 | $1,200 |
| $160,000 | $20,000 | $20,000 (cap phased down to $24,000, still above tips) | $4,800 |
| $410,000 | $5,000 | $0 (fully phased out) | $0 |
Where the deduction disappears entirely
| Filing status | Cap | Fully phased out at |
|---|---|---|
| Single / head of household | $25,000 | $400,000 MAGI |
| Married filing jointly | $25,000 | $550,000 MAGI |
| Married filing separately | $0 | Any income |
Notice the cap itself doesn’t change between single and joint — only the overtime deduction doubles for joint filers. The tips deduction phases out later for joint filers only because the MAGI threshold it starts from is higher, not because the cap is bigger.
A limit this calculator doesn’t model
Self-employed tip earners can’t deduct more than their net income (before this deduction) from the specific business the tips came from, and the deduction doesn’t apply at all if that business is a “specified service trade or business” — law, accounting, health, consulting, financial services, and similar fields. Almost everyone claiming this deduction is a W-2 employee, for whom neither limit applies, which is why the calculator doesn’t ask about it.
Is your job on the list?
Only tips from the 71 occupations on Treasury’s list qualify. Look yours up — with its three-digit code for Box 14b of the W-2 — in the full TTOC code list.
Questions
- What are "qualified tips"?
- Voluntary cash or charged tips from customers, including your share of a tip pool, earned in an occupation that customarily and regularly received tips on or before December 31, 2024. A mandatory service charge relabelled as a "tip" doesn't qualify — it has to be a genuinely voluntary payment.
- Which occupations qualify?
- The Treasury Department's final list (effective 2026-06-12) names 71 occupations across 8 categories — food and beverage service, entertainment and events, hospitality, home services, personal services, personal appearance and wellness, recreation and instruction, and transportation and delivery. Being tipped occasionally in a job that isn't on the list doesn't qualify, no matter the amount received.
- How much can I deduct?
- Up to $25,000 a year, regardless of filing status — unlike the overtime deduction, married couples filing jointly don't get double this cap. Above $150,000 of MAGI (single) or $300,000 (joint), the cap drops by $100 for every $1,000 over, in whole-$1,000 steps.
- At what income does the deduction disappear completely?
- $400,000 of MAGI for a single filer, $550,000 for a married couple filing jointly.
- I'm self-employed and get tips. Does this still apply?
- Yes, but with a limit this calculator doesn't model: your deduction can't exceed your net income (before this deduction) from the specific business the tips came from. It also doesn't apply if that business is a "specified service trade or business" such as law, accounting, health, or financial services.