No tax on tips calculator

Servers, bartenders, drivers and others who earn tips in listed jobs can deduct qualified tips, up to a cap. Find yours.

Tips deduction calculator

Qualified tips (box 12, code TP)

Find it on your 2026 Form W-2 (box 12, code TP). For 2025, use the tips shown on your records.

My job is on the IRS list of tipped occupations, and tips are not from a specified service business.

Tax yearFiling status

Modified adjusted gross income (MAGI)For most workers this is the AGI on Form 1040 line 11b. Not sure? Use the helper.

MAGI helper

AGI (Form 1040 line 11b)Excluded Puerto Rico incomeForeign income excluded (Form 2555)American Samoa exclusion (Form 4563)

Your deductions (optional)Itemizing? Enter your itemized total. Otherwise leave blank.

Enter your tips to see the deduction, each step, and the estimated tax saved.

Estimate only, not tax advice. Your return is decided by the IRS forms and instructions, and a tax professional can check your numbers.

How the tips deduction is worked out

Schedule 1-A takes your qualified tips, stops at $25,000, then subtracts $100 for each full $1,000 of MAGI above $150,000 ($300,000 if you file jointly). What is left is the deduction. It is available whether you itemize or not, and you need a valid Social Security number.

The occupation matters. The IRS publishes a list of occupations that customarily receive tips, and tips from other work do not qualify. Check the list at IRS.gov/TippedOccupations. Tips from a specified service trade or business, and self-employed tips above your net profit, have extra limits described in the IRS guidance.

If you also work overtime, the two deductions are separate and each has its own cap. Use the overtime calculator for that part. The W-2 code is explained on the code TP page.

Sources

Last checked October 22, 2026. Figures follow the IRS pages above; the law can change, so confirm on irs.gov before you file. This site gives estimates, not tax advice.

Questions

How much can I deduct for tips?

Up to $25,000 per return for tax years 2025 through 2028. The cap is $25,000 for every filing status, including joint returns.

Which tips qualify?

Tips received in an occupation on the IRS tipped occupations list. For 2026, the W-2 shows the occupation code in box 14b next to the amount in box 12 code TP.

Does the phase-out work like the overtime one?

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

Do tips become free of Social Security and Medicare tax?

No. The deduction only reduces income tax on Form 1040.

Can I claim it if I am married filing separately?

No. If you are married, you must file jointly to claim the tips deduction.