Estimate your new qualified-tips deduction from the One Big Beautiful Bill Act. Enter your filing status, qualified tips, and modified AGI — the calculator applies the $25,000 cap and the MAGI phase-out for tax year 2025.
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Estimated 2025 tips deduction
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Enter your qualified tips to estimate the deduction.
Maximum deduction (lesser of tips or $25,000)—
Phase-out begins (your status)—
Phase-out reduction—
Estimated federal income-tax savings—
How the “No Tax on Tips” deduction works
Provision
Detail
Maximum deduction
$25,000 of qualified tips, per return
Phase-out begins (MAGI)
$150,000 single / HoH · $300,000 married filing jointly
Phase-out rate
−$100 for each $1,000 of MAGI over the threshold
Tax years
2025 through 2028
How to claim
Schedule 1-A — above-the-line (works with the standard deduction)
Created by the One Big Beautiful Bill Act (OBBBA), this is an above-the-line deduction — you can take it whether or not you itemize. It reduces your federal income tax only: you still owe Social Security and Medicare (FICA) tax on your tips. Only qualified tips in customarily-tipped occupations count — wait staff, bartenders, salon workers, personal trainers, gig-economy workers, and similar roles. Tips earned in a specified service trade or business (such as law, health, or the performing arts) do not qualify. Married taxpayers must file jointly to claim it.
Because 2025 W-2s and 1099s won't separately report qualified tips, the IRS issued Notice 2025-69 allowing reasonable methods to determine the amount, and created the new Schedule 1-A to claim it on Form 1040.
Questions
How much can I deduct for tips in 2025?
Up to $25,000 of qualified tips. The deduction is reduced once modified AGI passes $150,000 (single/HoH) or $300,000 (joint), by $100 for every $1,000 over.
Do I still pay Social Security and Medicare on tips?
Yes — the deduction lowers federal income tax only, not FICA. Your tips remain subject to Social Security and Medicare tax.
Which jobs qualify?
Occupations that customarily and regularly received tips before 2025 — food service, bartending, salons, personal training, gig work, and the like. Specified service trades (law, health, performing arts, etc.) do not qualify.
How do I claim it?
On the new IRS Schedule 1-A filed with Form 1040. It's above-the-line, so it works with the standard deduction. Tips must be reported on W-2, 1099, or Form 4137.
Estimate only, based on the One Big Beautiful Bill Act and IRS Notice 2025-69. The phase-out reduction is computed in whole $1,000 increments; the exact deduction is figured on IRS Schedule 1-A. This tool does not reduce Social Security or Medicare tax. Not tax advice and not affiliated with the IRS.