No Tax on Tips Calculator
The federal tips deduction is the smaller of your qualified tips and a maximum of $25,000, reduced by $100 per $1,000 of MAGI over $150,000 (single) or $300,000 (joint). It cuts income tax, not Social Security or Medicare tax.
Want the rules in plain English? Read the guide: who qualifies and how to claim it.
How to use this no tax on tips calculator
- Enter the qualified tips you expect to report for the year.
- Enter your modified adjusted gross income (MAGI), which is close to your AGI for many people.
- Choose single or married filing jointly, and your marginal tax rate. The rate is the tax bracket applied to your last dollars of income.
- Read your estimated deduction, the maximum your income allows and the federal income tax you might save.
What is the no tax on tips deduction?
It is a federal income tax deduction for qualified tips that applies to tax years 2025 through 2028. It lowers your taxable income by up to $25,000 of qualified tips. It is an above-the-line deduction, so you can claim it whether or not you itemize. It is a deduction, not a credit and not a refund of the tips, so the tax you save is the deduction times your marginal rate.
Who qualifies for the no tax on tips deduction?
The IRS describes it for workers in occupations that customarily and regularly receive tips, with a valid Social Security number. Treasury and the IRS have published a list of qualifying occupations. Married taxpayers must file jointly to claim it. Workers in certain specified service trades and the people who work for them are excluded. Self-employed workers can deduct qualified tips only up to the net income of the business where they earned them. Read the IRS guidance to confirm your situation, because some calculator sites describe self-employed eligibility differently.
How does the income phase-out work?
The $25,000 maximum shrinks when your MAGI goes above $150,000 for single filers or $300,000 for joint filers. The maximum falls by $100 for each $1,000 of income above the threshold, and it is gone entirely at $400,000 single or $550,000 joint. Your deduction is then the smaller of your qualified tips and the reduced maximum, so the phase-out only matters if your tips are above that reduced maximum.
| MAGI | Maximum deduction (single) | Maximum deduction (joint) |
|---|---|---|
| $150,000 | $25,000 | $25,000 |
| $175,000 | $22,500 | $25,000 |
| $200,000 | $20,000 | $25,000 |
| $250,000 | $15,000 | $25,000 |
| $300,000 | $10,000 | $25,000 |
| $350,000 | $5,000 | $20,000 |
| $400,000 | $0 | $15,000 |
Estimated federal tax saved
For income below the phase-out. Tax saved = deduction × the bracket the deducted dollars would have been taxed in (the calculator works this out from your income). Typical values:
| Qualified tips | Deduction | At 10% | At 12% | At 22% | At 24% |
|---|---|---|---|---|---|
| $5,000 | $5,000 | $500.00 | $600.00 | $1,100.00 | $1,200.00 |
| $10,000 | $10,000 | $1,000.00 | $1,200.00 | $2,200.00 | $2,400.00 |
| $15,000 | $15,000 | $1,500.00 | $1,800.00 | $3,300.00 | $3,600.00 |
| $20,000 | $20,000 | $2,000.00 | $2,400.00 | $4,400.00 | $4,800.00 |
| $25,000 | $25,000 | $2,500.00 | $3,000.00 | $5,500.00 | $6,000.00 |
| $30,000 | $25,000 | $2,500.00 | $3,000.00 | $5,500.00 | $6,000.00 |
Worked examples
No phase-out: a single server with $12,000 in qualified tips and $45,000 of MAGI deducts $12,000. At a 12% rate that saves about $1,440 of federal income tax.
Phase-out that does not matter: a single filer with $20,000 in qualified tips and $170,000 of MAGI is $20,000 over the threshold, so the maximum falls by $2,000 to $23,000. Tips of $20,000 are below that, so the full $20,000 is deductible. At 24% that saves about $4,800.
Phase-out that matters: the same filer with $25,000 in qualified tips has a $23,000 maximum, so the deduction is $23,000.
Do I still pay Social Security and Medicare tax on tips?
Yes. The deduction reduces federal income tax only. Social Security (6.2%) and Medicare (1.45%) taxes still apply to your reported tips, which is 7.65% for an employee. The calculator shows this amount for reference.
What can change your result
Only tips that meet the IRS definition and are properly reported count, and only for jobs on the IRS list of tipped occupations. Married couples must file jointly to claim the deduction. Your state may or may not follow the federal rule. The IRS form may round income above the threshold up to the next $1,000, so the figure on your return can differ slightly from this estimate. Payroll taxes do not go away: Social Security and Medicare still apply to every dollar of tips.
Key terms
- Qualified tips
- Tips that meet the IRS definition for this deduction.
- MAGI
- Modified adjusted gross income, used for the phase-out.
- Marginal rate
- The tax rate on your last dollar of income.
- Above-the-line deduction
- A deduction you can take without itemizing.
- FICA
- Social Security and Medicare payroll taxes, which still apply.
Brackets and standard deductions checked on 2026-11-11 against IRS Rev. Proc. 2025-32 (2026) and Rev. Proc. 2024-40 (2025).
This tool gives an estimate and is not tax advice. Rules are as described in IRS guidance on the date shown on this page.
No Tax on Tips Calculator FAQ
What is the no tax on tips deduction?
A federal income tax deduction for qualified tips of up to $25,000 a year, available for tax years 2025 through 2028. You can claim it whether or not you itemize.
How much will no tax on tips save me?
Your deduction times your marginal tax rate. For example, a $12,000 deduction at a 12% rate saves about $1,440 in federal income tax.
Who qualifies for the no tax on tips deduction?
Workers in occupations that customarily receive tips, with a valid Social Security number. Married taxpayers must file jointly. Certain specified service trades are excluded. Check the IRS guidance.
How does the phase-out work?
The $25,000 maximum falls by $100 for every $1,000 of MAGI above $150,000 (single) or $300,000 (joint). Your deduction is the smaller of your qualified tips and the reduced maximum.
Do I still pay Social Security and Medicare tax on tips?
Yes. The deduction only reduces federal income tax, not payroll taxes.
Does no tax on tips apply to state taxes?
It is a federal rule. Whether your state follows it depends on the state.
Do cash tips count?
Tips need to meet the IRS definition and be reported. Keep records of all tips you receive and read the IRS guidance.
Is there also no tax on overtime?
A separate deduction for qualified overtime exists for the same tax years under the same law. This calculator covers tips only. Check IRS guidance for overtime.
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Last updated: November 11, 2026 · How we check this calculator