ΣBenefitMath

FederalSame rules in every state

No Tax on Tips Calculator

See how much of your tips you can deduct and what it saves on your federal return.

This is a federal income tax tool for tax year 2026 (the return you file in early 2027). It does not change SSI, SNAP or other benefits; those are on the benefits calculator.

Your tips
How you're paid
Cash and card tips, including tips shared with you
Self-employed only: profit before this deduction
Gross, before taxes
Check these

Example numbers are filled in. Replace them with yours.

Common questions

How the tips deduction works

From 2025 through 2028, workers in jobs that customarily get tips can deduct up to $25,000 of tips a year from their income before federal income tax. It works whether you take the standard deduction or itemize.

  1. Add up the tips you got from customers, including tips shared with you through a tip pool.
  2. Cap it at $25,000. If you're self-employed, it also can't be more than your profit from that work.
  3. The cap shrinks by $100 for every $1,000 of income over $150,000 ($300,000 joint).
  4. Your tax drops by the deduction times your bracket rate.
Which jobs count?

The IRS published a list of occupations that customarily received tips as of December 31, 2024, such as servers, bartenders, hairstylists and delivery drivers. If your job isn't on the list, your tips don't qualify.

Do I still pay Social Security tax on tips?

Yes. The deduction only lowers federal income tax. Social Security and Medicare tax, and state income tax, still apply.

Do service charges count?

No. Mandatory service charges and automatic gratuities set by the business are wages, not tips.

Does this affect SNAP or SSI?

No. Those programs count your tips as earned income either way.