No Tax on Tips Calculator
Estimate your tax savings from the new tips deduction.
The OBBBA "no tax on tips" deduction lets workers in customarily tipped occupations deduct qualified cash tips from their federal income tax, up to an annual cap. Enter your tips and income to estimate what you'll save once the cap and the income phase-out are applied.
Tips are not fully tax-free: the deduction lowers federal income tax only. Social Security and Medicare are still withheld on your tips exactly like regular wages, and you can't claim the deduction if you file married filing separately.
Frequently asked questions
Are tips tax-free under this deduction?
No. The deduction reduces the federal income tax on qualified cash tips, up to the annual cap. Social Security and Medicare still apply to every tip dollar, so tips are not fully tax-free.
What is a customarily tipped occupation?
The deduction applies only to occupations that customarily and regularly receive tips, on a list published by the Treasury. If your job isn't on that list you can't claim it, and this calculator tells you rather than silently returning $0.
Is there a cap or phase-out?
Yes. Qualified tips are deductible up to an annual per-return cap; tips above the cap stay taxable. The cap also phases out as your modified adjusted gross income rises above the threshold for your filing status.
Can married filing separately claim it?
No. Like the overtime deduction, the tips deduction is unavailable to taxpayers who file married filing separately.
Related calculators
Source: OBBBA tips deduction; Treasury tipped-occupation guidance; rates year-versioned in our data.