Tip Deduction Eligibility Calculator

Find out if your tips may qualify under the One Big Beautiful Bill Act—plus an estimate of your potential deduction (based on your income and job type).

Answer a few quick questions to check eligibility, review the occupation list, and see how the $25,000 cap and income phaseout thresholds may affect your result.

Start the Calculator
Travis Tandy CEO & President of Tandy Consulting Inc
No Tax on Tips -- Eligibility & Estimate Calculator | Tandy Consulting Inc.

Tandy Consulting Inc.

Trusted Tax & Accounting Experts.

No Tax on Tips -- Quick Check

Tip Deduction Eligibility & Estimate Calculator

Use this tool to quickly screen eligibility and estimate a potential tip deduction amount. If your answers include any "Not sure," the result will flag "Needs review."

Start the calculator Read the Q&A

Calculator

Enter the details below. You'll get an eligibility signal and a deduction estimate (if eligible). This estimator uses the common thresholds ($150,000 / $300,000) and a simplified phaseout model.

If you select "Not sure" anywhere, the tool will show "Needs review."

Comprehensive Q&A

Below is a client-friendly guide to the tip deduction rules, including thresholds and the occupation list used for eligibility screening. For official guidance, see the IRS "no tax on tips" resources and tipped-occupations guidance.

What's the maximum tip deduction?
The deduction is capped at $25,000 per year (simplified cap used in this calculator). Official IRS guidance discusses the deduction and how to claim it.
What are the income thresholds?
The commonly used thresholds are:
  • $150,000 MAGI (Single / HOH / others)
  • $300,000 MAGI (Married Filing Jointly / Qualifying Widow(er))
This estimator applies a simplified phaseout starting above those thresholds.
How does the phaseout work in this calculator?
This page uses a simplified model: the estimated deduction is reduced by 10% of MAGI above the threshold, until it reaches $0. (Different summaries describe the phaseout; always defer to final IRS instructions for filing.)
What counts as "qualified tips"?
IRS/Treasury guidance describes qualified tips as cash or cash-equivalent tips that are voluntarily paid by a customer. Mandatory charges (like automatic gratuities/service charges) are treated differently than voluntary tips.
Do I still need to report tips?
Yes. The deduction is based on reported/substantiated tips (for example, W-2 tip reporting and related reporting methods described by the IRS). Keep documentation that supports your tips and reporting.
Does this remove payroll taxes (Social Security/Medicare) on tips?
This deduction is an income tax deduction. Tips may still be subject to payroll taxes depending on how they are reported/treated. Review IRS instructions and your pay statements for details.
Who is not eligible?
Common disqualifiers include:
  • Married filing separately (often excluded under the rules summarized by IRS guidance)
  • No SSN on the return
  • Occupation not on the tipped-occupation list
  • Tips that are not "qualified tips" (for example, mandatory service charges)
  • Unreported/unsubstantiated tips
  • Possible limitations for SSTBs (facts-and-circumstances; requires review)

Occupation list (used for screening)

Below is the tipped-occupation list used in Treasury/IRS guidance (shown here as the occupation titles and codes used in the published table). Source: Federal Register proposed list of occupations that customarily and regularly received tips. View the source

Note: This list is presented for client education and screening only. Final eligibility depends on IRS filing instructions and your facts.
Tandy Consulting Inc.
Trusted Tax & Accounting Experts.
Disclosure: This page provides general educational information and a simplified estimate. Eligibility and amounts depend on IRS rules and your records. This does not create an engagement.

Ready to get started?

You're one click away from expert answers to your most critical tax quandries.

Get my FREE Consultation