StatementToExcel

Tax year 2026 · Runs in your browser · Nothing uploaded

No Tax on Tips Calculator (2026 and 2025)

If you work in an IRS-listed tipped occupation, you can deduct up to $25,000 of qualified tips a year for 2025–2028, reduced above $150,000 MAGI ($300,000 joint). Tips are still subject to Social Security and Medicare.

How no tax on tips works

Employees and self-employed workers can both claim it, on Schedule 1-A, Part II, with or without itemizing. The $25,000 cap is per return — it isn’t doubled on a joint return. Married couples must file jointly, and the person who received the tips needs a Social Security number valid for employment.

Calculator

Qualified tips
IRS tipped occupations list
Employees
Self-employed / gig work
Form 1040 line 11b, plus any excluded foreign or territory income
Used only for the tax-saved estimate
Qualified amount
$0
After the cap
$0
Phase-out reduction
$0
Your deduction
$0
Federal income tax saved (est.)
—

    Doesn’t reduce FICA (7.65%). Whether your state follows this deduction depends on your state. Claimed on Schedule 1-A, Part II.

    This calculator gives an estimate for federal income tax only, based on IRS guidance as of 2026-11-10. It is not tax advice. Social Security, Medicare and state taxes are not reduced. Confirm your figures with your W-2/1099 and the Schedule 1-A instructions, or a tax professional.

    Is my job on the IRS tipped occupations list?

    Only tips earned in an occupation on the IRS list count. The list has more than 70 occupations, each with a three-digit Treasury Tipped Occupation Code, in 8 groups: 100s beverage and food service, 200s entertainment and events, 300s hospitality and guest services, 400s home services, 500s personal services, 600s personal appearance and wellness, 700s recreation and instruction, and 800s transportation and delivery. The final rules added visual artists, floral designers and gas pump attendants. The calculator’s occupation menu is copied from theIRS list.

    Tips earned in a specified service trade or business (SSTB) are excluded by law, including when your employer is an SSTB. The details are set by the IRS — check its guidance; this calculator doesn’t test for it.

    What counts as a qualified tip

    • Paid voluntarily by the customer, not negotiated, and with the amount decided by the customer.
    • Paid in cash or an equivalent: check, credit or debit card, gift card, or a payment app.
    • Received from customers or, for employees, through a tip-sharing arrangement such as a tip pool.
    • Not a mandatory service charge — unless the customer can remove or change it.

    W-2 employees: box 12 code TP and box 14b

    On 2026 Forms W-2, box 12 code TP shows the total cash tips you reported to your employer, and box 14b shows up to two Treasury Tipped Occupation Codes. If box 14b shows only 000, the tips in code TP aren’t qualified tips.

    1099, DoorDash, Uber and other gig workers

    If you’re self-employed in a listed occupation — the list includes taxi and rideshare drivers and goods delivery people — enter the qualified tips included in Form 1099-NEC box 1, 1099-MISC box 3 or 1099-K box 1a. The deduction can’t be more than the net profit of the business you earned the tips in.

    Limits and phase-out

    Up to $25,000 per return. Above $150,000 MAGI ($300,000 joint) the deduction drops by $100 for every full $1,000 over — subtract the threshold, divide by 1,000, round down. A full $25,000 deduction is gone at $400,000 MAGI (single) or $550,000 (joint).

    Worked examples

    1. W-2 server (code 102). Wages $38,000 including code TP $18,000. Single, AGI $38,000. Taxable income falls from $21,900 to $3,900, and tax from $2,380 to $390 — $1,990 saved. (10% × $12,400 = $1,240, plus 12% × $9,500 = $1,140.)
    2. Delivery driver on a 1099-K. Tips $6,000, net profit of the delivery business $4,500. The deduction is capped at net profit: $4,500.
    3. High income. Single, MAGI $162,500, qualified tips $30,000. Capped at $25,000; $12,500 over → 12.5 → rounded down to 12 → $1,200 off → $23,800.
    4. Automatic service charge. A restaurant adds 18% to large parties and the customer can’t remove it. That money is not a qualified tip, even if it’s paid out to staff.

    How to claim it on Schedule 1-A (Part II)

    Enter your qualified employee tips and qualified self-employed tips in Part II of Schedule 1-A, apply the $25,000 cap and the MAGI reduction, and attach Schedule 1-A to Form 1040, 1040-SR or 1040-NR.

    Keeping your own tip log? If card and app tips land in your bank account, you canconvert a PDF bank statement to Excel orexport it to CSV and total them in a spreadsheet — in your browser, without uploading the statement.

    Methodology

    Qualified tips = W-2 code TP + min(1099 tips, net profit), only when an IRS occupation code is chosen. Deduction = max(0, min(qualified tips, $25,000) − floor(max(0, MAGI − threshold) / 1,000) × $100). Tax saved is 2026 federal tax before minus after, using Rev. Proc. 2025-32 rate tables and standard deduction; MAGI is used as AGI; credits are ignored; no 2025 estimate is shown. Every calculation happens in your browser.

    No tax on tips FAQ

    Are tips tax-free in 2026?

    Not fully. You can deduct up to $25,000 of qualified tips from federal taxable income for 2025–2028. Social Security and Medicare (or self-employment tax) still apply, and state rules vary.

    Does no tax on tips apply to DoorDash, Uber or Instacart?

    It can. Self-employed people qualify if their occupation is on the IRS list (it includes taxi and rideshare drivers and goods delivery people) and the tips are included on a 1099-NEC, 1099-MISC or 1099-K. For self-employed workers the deduction can’t exceed the net profit of that business.

    Is my job on the list?

    Check the Treasury Tipped Occupation Code list at IRS.gov/TippedOccupations. More than 70 occupations across 8 groups qualify, from bartenders to water-taxi operators. The final rules added visual artists, floral designers and gas pump attendants.

    Do credit-card and app tips count?

    Yes. Qualified tips can be paid in cash, by card, check, gift card or payment app, as long as the customer gave them voluntarily.

    Do automatic service charges count?

    No, unless the customer can remove or change the charge.

    What are code TP and box 14b on my 2026 W-2?

    Code TP is the total cash tips you reported to your employer; box 14b is your Treasury Tipped Occupation Code. If box 14b shows only 000, those tips don’t qualify.

    Is the $25,000 limit doubled for married couples?

    No. It’s $25,000 per return, including joint returns. (The overtime limit is the one that doubles.)

    Can I claim both tips and overtime?

    Yes, if you qualify for each. They are separate parts of Schedule 1-A with separate limits.

    Do I have to itemize?

    No. It’s available with the standard deduction.

    What if I didn’t report my cash tips to my employer?

    Only tips reported on a W-2 or 1099, or that you report yourself on Form 4137, can be deducted. Keep a daily tip log.

    Is there an income limit?

    Yes. The deduction shrinks by $100 for every full $1,000 of MAGI above $150,000 ($300,000 joint).

    Sources and last updated

    Last updated: · Tax year: 2026 · Maintained by the WattFlow team. No CPA or EA has reviewed this page.

    Changelog

    • — First published.

    This calculator gives an estimate for federal income tax only, based on IRS guidance as of 2026-11-10. It is not tax advice. Social Security, Medicare and state taxes are not reduced. Confirm your figures with your W-2/1099 and the Schedule 1-A instructions, or a tax professional.