US Tax Calculators
No Tax on Tips Calculator
Estimate your federal deduction on qualified tip income under the new "no tax on tips" law, for tax years 2025 through 2028.
This is a rough estimate for education, not tax advice. It covers the new federal income tax deduction only; tips are still subject to Social Security and Medicare (FICA) tax, and this deduction does not exist for state tax purposes in every state. Nothing you type is sent anywhere.
How "no tax on tips" works
The One Big Beautiful Bill Act (OBBBA), enacted July 2025, lets eligible workers deduct up to $25,000 of qualified cash tips from their federal taxable income each year, for tax years 2025 through 2028. It is an above-the-line deduction, so you can take it whether you use the standard deduction or itemize. The deduction phases out by $100 for every $1,000 (or part of $1,000) that your modified adjusted gross income (MAGI) is above $150,000 (single, head of household) or $300,000 (married filing jointly), fully disappearing at $400,000 and $550,000 respectively.
Only tips in occupations that customarily and regularly received tips as of December 31, 2024 qualify, per the IRS's published list of qualifying occupations. Tips must be reported (for example on a W-2, 1099, or your own tip records) to be counted.
Frequently asked questions
Does this eliminate all tax on tips?
No. It only removes federal income tax on the qualifying, deducted portion. FICA taxes (Social Security and Medicare) still apply to tip income, and most states do not automatically conform to this new federal deduction.
Do I need to itemize to claim it?
No, it is an above-the-line deduction available in addition to the standard deduction.
What if I'm married but file separately?
Married taxpayers generally must file a joint return to claim this deduction.
Related: the no tax on overtime calculator and the quarterly tax estimator.