Pennsylvania tips tax calculator and 2022 tip rules

Pennsylvania taxes tips as compensation at 3.07% with no federal deductions allowed, and its 2022 tipped-worker regulations protect card tips and tip pools more tightly than federal law.

Your Pennsylvania tips

State where you work Qualified tips this year

Voluntary cash and card tips on your W-2, 1099 or Form 4137 — not service charges.

Tax year

2025202620272028

Filing status Other income in your AGI

Wages without the tips, plus any other income (both spouses if filing jointly).

Your occupation The 71 Treasury Tipped Occupation Codes in the final rule (TD 10044).

How you are paid

Employee (W-2) Self-employed (1099)

More options

Itemized deductions (if larger than the standard deduction)

State marginal rate override (%) Leave blank to use the state’s published rate for your bracket.

Federal income tax saved in 2026Deduction $18,000 at 12% $2,160

$18,000 of the $25,000 cap used (72%)

Qualified tips	$18,000
After the $25,000 cap	$18,000
Income phase-out (MAGI $48,000)	$0
Tips deduction	$18,000
Federal tax before → after	$3,580 → $1,420
Social Security & Medicare still due on tips	$1,377
Pennsylvania 2026: Tips stay taxable in this state	$0
Total income tax saved	$2,160

What the estimate leaves out

Card tips, fees and pools

Since August 5, 2022, the Department of Labor & Industry’s rules say tips paid by card or other non-cash means belong to the employee, and employers may not deduct card-processing fees from them. A pool that includes anyone paid the tipped cash wage may include only workers in customarily tipped occupations; managers, supervisors and owners may not take from it. A worker is tipped in Pennsylvania only above $135 a month in tips, and the cash wage is $2.83.

Pennsylvania figures

Cash wage / minimum	$2.83 / $7.25
In force	July 1, 2026
Next change	none scheduled
Tipped threshold	More than $135 a month in tips
Tips on the 2025 return	tips stay taxable in this state. Tips are taxable PA compensation, and federal deductions are not permitted in figuring PA taxable income. Source: Pennsylvania Department of Revenue
Tips on the 2026 return	tips stay taxable in this state. Unchanged. Source: Pennsylvania Department of Revenue

No federal deductions on the PA-40

The Department of Revenue’s personal income tax guide treats tips as taxable compensation and does not allow the deductions used for federal AGI or taxable income, so qualified tips stay in Pennsylvania income.

A Pittsburgh server

$16,000 of tips save $1,830 federally; Pennsylvania taxes all of them. Thirty hours at $2.83 plus $120 of tips clear the $218 minimum, so nothing is owed — provided no processing fees were taken out of the card tips.

Check a Pennsylvania workweek

Employer make-up owed$2.83 cash wage + tips must reach $7.25 an hour. $0

Minimum for the hours	$232
Cash wage paid	$91
Tips counted toward the minimum	$150
Your effective hourly pay	$7.52

How the make-up rule works

Where these figures come from

Federal rules: how the deduction works. Nearby: New York, New Jersey, Delaware, Maryland, West Virginia, Ohio.

Figures verified against primary sources on October 5, 2026