No Tax on Tips calculator
For tax years 2025 through 2028, federal law lets many tipped workers deduct up to $25,000 of qualified tips a year from federal income tax. It phases out at higher incomes and doesn't touch Social Security, Medicare, or state tax. Estimate what it means for you.
Your year
Your estimate
- Your deduction cap
- $25,000
- Tips you can deduct
- $0
- Tips still federally taxed
- $0
- Rough federal savings
- $0
Tipfolio applies this deduction inside its tax set-aside estimate automatically, from the tips you actually log.
Coming soon to theApp StoreEstimate only, not tax advice. Whether your job qualifies, what counts as a qualified tip, and your real bracket depend on your full situation — see theplain-English guide and talk to a tax professional.
How the deduction works
- Up to $25,000 of qualified tips per year is deductible from federal income tax for tax years 2025–2028.
- It phases out at higher incomes: the cap shrinks by $100 for every $1,000 of income above $150,000 (single) or $300,000 (married filing jointly), hitting zero at $400,000 / $550,000.
- It only reduces federal income tax. Social Security and Medicare (FICA) still apply to every tipped dollar, and so does state income tax where you have one.
- You still report all tips. The deduction happens on your return; it is not a license to stop reporting. Both W-2 employees and 1099 workers in qualifying occupations can claim it, even without itemizing.
What this means for your set-aside
If your tips fit under the cap, the federal-income-tax slice of your set-aside can drop to zero — but keep setting aside for FICA and state tax. Run your numbers through thetax set-aside calculator to see the full picture, and readhow much to save for taxes on tips.