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No tax on tips — my deduction for 2026
Qualified tips, the $25,000 limit, the phase-out over $150,000 and the federal tax you save
Name: [YOUR NAME]
City and state: [CITY, STATE]
Prepared on: [DATE]
1. Your numbers
What Your number
Filing status [CHOOSE ONE]
Qualified tips for 2026 (cash and card tips, shared tips) $ [AMOUNT]
Total income for 2026 (AGI), tips included $ [AMOUNT]
2. From tips to tax saved
Step Result
Up to the yearly limit [RESULT]
Phase-out: $100 for each full $1,000 of income over $150,000 ($300,000 joint) [RESULT]
Your deduction (Schedule 1-A) [RESULT]
Federal income tax without the deduction [RESULT]
Federal income tax with the deduction [RESULT]
Federal income tax you save [RESULT]
Saved per dollar deducted (your bracket) [RESULT]
The rules (checked October 21, 2026) • Deduct qualified tips for 2025–2028 in an occupation on the IRS list. • Up to $25,000 a year; $100 less for each full $1,000 of MAGI over $150,000 ($300,000 joint). • SSN required; married couples must file jointly. Claimed on Schedule 1-A with the standard deduction. • Social Security and Medicare still apply; state income tax depends on your state — check your state tax agency. Check at the start of the year.
3. Before you claim it
Done Check
☐ Your job is on the IRS list of tipped occupations
☐ All tips were reported to your employer (2026 W-2, box 12, code TP) or on Form 4137
☐ Mandatory service charges and automatic gratuities are left out — they are wages, not tips
☐ Married? You file jointly — married filing separately cannot claim it
☐ Keep a daily tip log (cash, card, tip-outs) for 2026
☐ Put the deduction into the tax refund estimator as an extra deduction
An estimate, not tax advice. IRS guidance on qualified tips, Schedule 1-A and Rev. Proc. 2025-32, checked October 21, 2026. Check at the start of the year.