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No Tax on Tips deduction calculator
Estimate how much of your tips you can deduct on your 2025–2028 federal return, with the income phase-out worked the way IRS Schedule 1-A does it.
Your numbers
Nothing you type leaves this page.
| Qualified tips | $0.00 |
| After the $25,000 cap | $0.00 |
| Income phase-out | −$0.00 |
| Self-employed limit | — |
| Estimated deduction | $0.00 |
Show the math (Schedule 1-A, Part II)
Line numbers are from the 2025 form. Line 11 rounds down, so $1,999 over the threshold counts as one $1,000 step, not two.
Estimate, not tax advice. This calculator uses the published rules for tax years 2025–2028, but your return can differ: the real MAGI has add-backs, only tips in an eligible occupation count, and tips earned in a specified service trade or business have special rules. TipLedger isn't affiliated with the IRS or Treasury. Check with a tax professional before you file.
How the deduction works
- It's a deduction, so it lowers your taxable income. It is not a credit and it doesn't make the tips invisible to payroll tax.
- You can take it whether you itemize or use the standard deduction.
- If you're married, you have to file jointly, and you need a valid Social Security number.
- For every full $1,000 your MAGI is over the threshold, the deduction drops by $100. It hits zero at $400,000 (single or head of household) or $550,000 (joint).
- If you're self-employed, the deduction can't be more than the net income from the business where you earned the tips.
What counts as qualified tips
- Voluntary and not negotiated. The customer decides to tip and how much.
- Paid in cash or an equivalent: cash, check, credit or debit card, or a payment app.
- From customers, or through a tip-sharing arrangement such as a tip pool.
- Earned in a listed occupation. Treasury's list has eight categories, from Beverage and Food Service to Transportation and Delivery. Find yours at IRS.gov/TippedOccupations.
- Not mandatory service charges. An automatic 18% large-party charge the customer can't change isn't a qualified tip. If the customer can disregard or change it, it can be.
How you claim it
The deduction goes on Schedule 1-A (Form 1040), Part II. The form counts tips shown on your Form W-2, on a Form 1099 (NEC, MISC or K), or that you reported yourself on Form 4137. In other words, tips that never show up in your records or your paperwork are hard to claim. Here's how to keep the record.
Let your phone keep the number.TipLedger logs each shift in about 30 seconds and keeps this estimate up to date as the year goes on. Free to download.
Questions people ask
How does the phase-out work?
The deduction starts to shrink when your modified adjusted gross income (MAGI) is over $150,000, or $300,000 if you file jointly. Schedule 1-A divides the amount over the threshold by $1,000, rounds down to a whole number, and takes $100 off the deduction for each step.
Do I have to itemize?
No. The IRS says the deduction is available whether you itemize or take the standard deduction.
Does it reduce Social Security and Medicare tax on my tips?
No. It's an income tax deduction. Your tips are generally still subject to Social Security and Medicare tax, which is why reporting them correctly still matters.
Which tax years does it cover?
Tax years 2025 through 2028.
Can I claim it if I'm married filing separately?
No. If you're married, you must file a joint return to claim it.
Sources
- IRS: What the "No Tax on Tips" deduction means for you
- 2025 Schedule 1-A (Form 1040), Part II, lines 4 to 13
- IRS: Final regulations listing tipped occupations (IR-2026-49)
- 26 U.S.C. § 224 (deduction for qualified tips)
- IRS Publication 15: tips and Social Security and Medicare tax
Last checked against these sources on October 21, 2026.