No Tax on Tips Calculator

Workers in tipped occupations can deduct up to $25,000 of qualified tips per year on Schedule 1-A — for tax years 2025 through 2028, whether or not you itemize. Enter your figures below; the calculator applies the cap and the income phase-out exactly the way the form does.

Rules verified against IRS sources — last verified October 26, 2026

Quick answer

Qualified tips are voluntary cash or charged tips received in an occupation on the IRS Treasury Tipped Occupation Code (TTOC) list. The federal deduction is capped at $25,000, is claimed on Schedule 1-A, line 13, and phases out as modified adjusted gross income (MAGI) rises above the Schedule 1-A threshold.

Your occupation The official IRS list of occupations that customarily and regularly received tips (Treasury Tipped Occupation Codes). 71 occupations in 8 categories.

Is your employer a “Specified Service Trade or Business” (SSTB)? Businesses in fields like health, law, accounting, consulting, financial services, athletics, or the performing arts. If your employer is one, its employees cannot claim this deduction (IRS Fact Sheet FS-2025-03).

Tips reported to your employer / shown on your W-2 ($) For 2025 this is W-2 box 7; for 2026 it's Box 12, code TP. Only reported tips count — this is the amount the deduction is built on.

Tips you received but did NOT report to your employer ($, optional) These cannot be deducted until they are reported — we'll show you what to do about them.

Self-employed / 1099 tips (optional)

Tips received in your own trade or business ($)

Net income of that business ($) Business tips counted toward the deduction cannot exceed the business's net income (Schedule 1-A, Part II, line 5).

Filing status The $25,000 cap is per return, single or joint. Married filing separately cannot claim this deduction.

Your modified adjusted gross income (MAGI) ($) Roughly your AGI (Form 1040, line 11) plus a few foreign-income add-backs: Schedule 1-A, Part I works it out. The deduction phases out above $150,000 ($300,000 joint).

Your marginal federal tax rate (%) — optional, for the savings estimate

Tax year

How the tips deduction works

On Schedule 1-A, Part II, your qualified tips (line 6) are first capped at $25,000 (line 7). If your MAGI is above $150,000 ($300,000 if married filing jointly), the deduction is reduced by $100 for every $1,000 (or part-thousand rounded down) of MAGI over the threshold (lines 8–12). The result, line 13, is your deduction. Tips must be voluntary, paid in cash or a cash equivalent (card, check), and reported; mandatory service charges are not qualified tips. You also need a Social Security number valid for employment, and if you are married you must file jointly.

Already have your W-2? The fastest sanity check is the W-2 code checker — for 2026, your reported tips should appear in Box 12 with code TP and your occupation code in box 14b.

Estimates only — not tax advice. This calculator follows the IRS rules cited on this page. It does not review your full situation; confirm important figures with the IRS source or a tax professional.

Key terms: Qualified tips · MAGI · Phase-out · SSTB · TTOC — full glossary