No Tax on Tips Calculator
The One, Big, Beautiful Bill Act lets qualifying workers deduct up to $25,000 in tip income from federal taxes. Enter your income below to see how much you save.
annual savings ($150/month)
- Tip income entered
- $15,000
- After $25,000 cap
- $15,000
- Deductible amount
- $15,000
8.65%
Before
5.88%
After OBBBA
- ✓You work in an occupation that customarily and regularly receives tips (e.g., wait staff, bartenders, salon workers, rideshare drivers)
- ✓Tips are properly reported to your employer and shown on your W-2 or 1099
- ✓You have a work-eligible Social Security number
- ✓If married, you file a joint federal tax return — married filing separately does not qualify
- ✓Your tips aren't from a specified service trade or business (law, accounting, consulting, and similar fields are excluded)
This deduction applies to federal income tax only — it does not reduce Social Security or Medicare (FICA) taxes. Available for tax years 2025–2028. Self-employed tipped workers: your deduction is limited to your net profit from that business (gross income including tips minus business deductions) — this calculator doesn't model business expenses, so self-employed results may overstate the deduction.
How the OBBBA Tip Deduction Works
Deduction Cap
Up to $25,000 in qualified tips per return. This is an above-the-line deduction — you don't need to itemize.
Income Phase-Out
Deduction reduces by $100 per $1,000 of MAGI above $150,000 (single) or $300,000 (MFJ). Fully phased out at $400K/$550K.
Federal Income Tax Only
The deduction reduces federal income tax but does not affect FICA (Social Security + Medicare) taxes on your tips.
Tax Years 2025–2028
The provision is temporary — it applies to tax years 2025 through 2028 unless extended by Congress.
Frequently asked questions
How much tip income can I deduct under the OBBBA?
You can deduct up to $25,000 in qualified tip income per tax return. The deduction phases out for taxpayers with MAGI above $150,000 (single) or $300,000 (married filing jointly), reducing by $100 for every $1,000 over the threshold.
Who qualifies for the no tax on tips deduction?
Employees in occupations that customarily and regularly received tips as of December 31, 2024. This includes wait staff, bartenders, salon workers, rideshare drivers, and similar roles. Tips must be reported on your W-2 or 1099.
Does the tip deduction reduce FICA taxes?
No. Social Security (6.2%) and Medicare (1.45%) still apply to your full tip income. The deduction only reduces federal income tax.
How long does the no tax on tips provision last?
Tax years 2025 through 2028. It was enacted as part of the One, Big, Beautiful Bill Act and is set to expire after 2028 unless extended.
Sources
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