No Tax on Tips Calc

No tax on tips calculator 2026

You can deduct up to $25,000 of qualified tips from federal taxable income for 2025 through 2028 — but Social Security and Medicare still apply, the deduction shrinks above $150,000 of income ($300,000 joint), and only 11 states let it reduce state tax for 2026.

Your tips

Tax year
How you are paid
More options

Pick your state

Each state page shows that state’s tax treatment, its tipped cash wage and tip credit, and a worked example with its own numbers. The figure beside each name is the 2026 state-tax status and the tipped cash wage (or the full minimum where tip credits are banned).

What the deduction does — and what it doesn’t

The One Big Beautiful Bill Act added section 224 to the Internal Revenue Code. For tax years 2025 through 2028 it lets a worker in one of 71 Treasury-listed occupations subtract voluntary cash and card tips from taxable income, whether or not they itemize. The cap is $25,000 per return — not per spouse — and it falls by $100 for each full $1,000 of modified AGI above $150,000, or $300,000 on a joint return, reaching zero at $400,000 and $550,000.

It is an income-tax deduction only. Tips are still wages for Social Security and Medicare, so a server with $18,000 of tips still pays $1,377 of payroll tax on them. It also does not lower adjusted gross income, which is why most states — whose returns start from federal AGI — do not pick it up automatically. Service charges and automatic gratuities never qualify, and married couples must file jointly. Read the full federal rules.

Do I pay state tax on tips?

Tips deductible on the 2026 state return (11): Arizona, Colorado, Hawaii, Idaho, Indiana, Iowa, Michigan, Montana, New York, North Dakota, Oregon. For 2025 the list was shorter (7): Arizona, Colorado, Idaho, Iowa, Montana, North Dakota, Oregon.

Partial exclusion (1): Georgia (first $1,750 of cash tips).

No income tax on wages (9): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.

Tips still taxed by the state (30): Alabama, Arkansas, California, Connecticut, Delaware, District of Columbia, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, Wisconsin. See every state’s citation.

Check a workweek

Quick answers

How much will no tax on tips save me?

Your saving is the deduction times your top federal bracket. A single filer with $18,000 of tips and $30,000 of other wages saves $2,160 in 2026, because the whole deduction comes out of the 12% bracket; someone in the 22% bracket saves $220 per $1,000 of tips.

Is my job on the list?

Treasury’s final rule (April 2026) lists 71 occupations in eight groups, from bartenders and wait staff to hairstylists, rideshare drivers, home movers and digital content creators. Search the full list.

What is a tip credit?

Federal law lets an employer count up to $5.12 an hour of tips toward the $7.25 minimum and pay only $2.13 in cash — as long as cash wage plus tips reaches the minimum every week. Seven states ban the credit; others set higher cash wages. Compare all states.

Does it apply to tips I report on Form 4137?

Yes. Unreported tips you add on Form 4137 count, as do tips on a W-2 and, for the self-employed, tips on a 1099-NEC, 1099-MISC or 1099-K — limited to the business’s net profit.

Figures verified against primary sources on