TaxBreakCalc
Sunsets after 2028 · tax years 2025–2028

No Tax on Tips Calculator

See the federal income tax you save on your tips under the 2026 OBBBA deduction — up to $25,000 of qualified tip income, with the cap and income phase-out applied. Built for servers, bartenders, and other tipped workers.

✓ Verified 2026-06-22 · IRS · Tax Foundation · CRS · pending CPA sign-off
Estimated federal income-tax saved
$3,300 /yr
On $15,000 of qualified tip income. Deduction $15,000 after the $25,000 cap + phase-out at your 22% bracket.
Phase-out under the $150k single cutoff — full deduction applies. FICA still applies to tip income.
See what to do with your savings →

How your savings is calculated

1. qualified tip income = your reported cash + credit/debit tips (from a listed occupation)
2. deduction = min(qualified tips, $25,000) (same cap, single or MFJ)
3. apply MAGI phase-out ($150k/$300k → $0 at $275k/$550k)
4. your savings = deduction × your tax bracket
FICA still applies. Social Security and Medicare tax are still owed on your tip income — this deduction is income-tax only.

Do your tips qualify?

Likely qualifies ✅

Cash and credit/debit tips reported on your W-2 from a traditionally tipped occupation — servers, bartenders, bellhops, valets, dealers, hairstylists, and the other 70+ occupations in the IRS final regulations.

Check carefully ❌

Tips from a specified service trade or business (SSTB) are excluded, and unreported/off-the-books tips don’t count. Self-employed tip income can qualify but is limited to net earnings — confirm the details.

Ready to file? Compare tax software

You just computed your tip deduction — the next step is claiming it. These support the OBBBA tip line on your return:

TurboTax

Guided interview for new OBBBA deductions. Best for full-service filers.

FreeTaxUSA

Free federal e-file; low-cost state. Good for confident DIY filers.

TaxSlayer

Tiered plans; supports tip and overtime deduction entry.

TaxAct

Step-by-step deduction discovery; price-lock promise.

Affiliate disclosure: we may earn a commission from these links at no cost to you. We list several so you can compare — help, not a single hard sell.

Questions, answered

How much of my tips are tax-free?

Under the 2025–2028 OBBBA provision, you can deduct up to $25,000 of qualified tip income — the same cap whether you file single or married filing jointly. The deduction lowers your taxable income; it does not make all tips tax-free.

Which tips count as "qualified"?

Cash and credit/debit tips reported on your Form W-2 (or 1099-NEC/MISC/K, or Form 4137), from a traditionally tipped occupation. The IRS final regulations list 70+ qualifying occupations (servers, bartenders, etc.).

I am self-employed or a gig worker — do I qualify?

Possibly. Self-employed tip income can qualify, limited to your net tip earnings. Specified service trades or businesses (SSTBs) are excluded. Confirm your situation with a tax professional.

Does this remove all tax on my tips?

No. It is an income-tax deduction, capped at $25,000 and phased out at higher incomes. FICA taxes (Social Security 6.2% + Medicare 1.45%) still apply to your tip income in full.

Is there an income limit?

Yes. The deduction phases out from $150,000 MAGI (single) / $300,000 (MFJ) and reaches $0 at $275,000 / $550,000.

When does it take effect and end?

Tax years 2025 through 2028; it sunsets after 2028 unless Congress extends it.

Methodology & sources

Figures verified as of 2026-06-22 against IRS guidance and the statute, re-checked weekly. The calculator applies the $25,000 cap and the MAGI phase-out. The math is pending CPA sign-off — treat results as estimates, not tax advice.

Sources

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