No Tax on Tips (OBBB Act) -- Eligibility + Estimator

No Tax on Tips (One, Big, Beautiful Bill Act) -- Client Eligibility + Estimate

The One, Big, Beautiful Bill Act (effective for tax years 2025--2028) created an above-the-line deduction for qualified tips received in certain customarily tipped occupations. The deduction can be claimed whether a taxpayer itemizes or not, and it generally caps at $25,000 per year, subject to rules and phaseout. (Educational estimate only.)

Max deduction: $25,000/yr ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors)) Phaseout begins at MAGI $150k ($300k joint) ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors)) Tips must be voluntary; some service charges excluded ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill)) SSN required; married must file jointly ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Tip Deduction Calculator

What this checks: basic eligibility (filing status, SSN, occupation list), qualified tips vs. service charges (client attestation), income thresholds with a simplified phaseout estimate, and a self-employed net income limit (if applicable). Actual eligibility and amounts depend on IRS rules and your records. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Filing status Married taxpayers generally must file jointly to claim this deduction. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Modified adjusted gross income (MAGI) Phaseout begins over $150,000 ($300,000 joint). ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Occupation (select the best match) The deduction requires working in an occupation on the IRS/Treasury list. The Treasury table also notes certain fields may be carved out as specified trades/businesses. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))

Qualified tips received (annual) Qualified tips are voluntary cash or cash-equivalent tips (including charged tips) and can include tip-pool amounts if reported. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Service charges / automatic gratuities (annual) Amounts added automatically are generally not "qualified tips." ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))

SSN included on return (required). ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Client attestation: "Qualified tips" are voluntary tips (not negotiated service charges) and will be properly reported. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Self-employed for this tipped activity (if checked, we apply the net-income limit). ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

This is an educational estimate only.

$0

Enter details above and click "Estimate."

Comprehensive Q&A

1) Does this mean tips are "not taxable" anymore?

The law creates a deduction for qualified tips (2025--2028). Proper reporting still matters. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

2) What counts as "qualified tips"?

Voluntary tips paid in cash or cash-equivalent methods (including charged tips) and tip-pool amounts when properly reported. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))
Tips must be paid voluntarily and not subject to negotiation (IRS/Treasury guidance). ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))

3) What does NOT count (service charges / automatic gratuities)?

Some service charges are not qualified tips--such as an automatic percentage added when the customer can't change it. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))

4) Who is eligible at a high level?

Must work in an occupation on the IRS/Treasury list. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))
SSN required; married generally must file jointly. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))
SSTB exclusions apply for certain self-employed and employees of SSTB employers. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

5) What's the maximum deduction?

Maximum annual deduction is $25,000. For self-employed, the deduction generally may not exceed net income from the tipped trade/business. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

6) How does the income phaseout work?

Phases out for MAGI over $150,000 ($300,000 joint). This calculator uses a simplified linear estimate for planning. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

7) Do tip pools count?

Qualified tips may include amounts received through mandatory or voluntary tip-sharing arrangements (like tip pools), assuming proper reporting. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))

8) What documentation should clients keep?

W-2/1099/other statements and tip reports.
Receipts and policies supporting voluntary tips vs. service charges.
For self-employed clients: records supporting net income from the tipped activity. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

9) Does this affect payroll taxes or California taxes?

This is a federal income tax deduction. Payroll tax and California tax treatment may differ--confirm current rules for the client's facts.

10) When can clients claim this?

IRS states the deduction is effective for tax years 2025 through 2028. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

Occupations: Qualified vs. Unqualified

Qualified occupations (official list categories)

Treasury and IRS grouped qualifying tipped occupations into eight categories (100s--800s). The list used in the dropdown is based on Treasury "Tipped Occupation Code" guidance. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))

Beverage & Food Service (100s) -- e.g., Bartenders, Wait Staff, Counter Workers. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Entertainment & Events (200s) -- e.g., casino roles, DJs, performers, ushers. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Hospitality & Guest Services (300s) -- e.g., bellhops, concierges, hotel housekeeping. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Home Services (400s) -- e.g., handyman, landscaping, electricians, plumbers, HVAC. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Personal Services (500s) -- e.g., event planners, pet care, tutoring, nannies. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Personal Appearance & Wellness (600s) -- e.g., hair services, nails, massage, fitness. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Recreation & Instruction (700s) -- e.g., caddies, tour guides, instructors. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))
Transportation & Delivery (800s) -- e.g., valet, rideshare, delivery, movers. ([home.treasury.gov](https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf))

Unqualified occupations (common examples)

Not on the IRS/Treasury list -- tips from roles not listed generally won't qualify. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill))
Specified Service Trade/Business (SSTB) exclusions -- certain self-employed SSTB and employees of SSTB employers are not eligible. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors))

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