United States · Tax year 2026, filed in 2027
No tax on tips calculator 2026
A single server on $45,000 with $12,000 of tips deducts all $12,000 in 2026, which cuts their federal income tax by $1,440.00. With $3,000 withheld, that is a $1,220.00 refund.
Change the answers below to see your own figures. It runs on the same engine as our full tax refund calculator.
Federal tax refund, 2026 return · single
$12,000.00 tips deduction
It lowers your tax by $1,440.00. Your estimate: $1,220.00 refund.
Your return, step by step
| Wages (your adjusted gross income) | $45,000.00 |
|---|---|
| Standard deduction | −$16,100.00 |
| No tax on tips | −$12,000.00 |
| Taxable income | $16,900.00 |
| Federal income tax (top bracket 12%) | $1,780.00 |
| Tax for the year | $1,780.00 |
| Federal tax withheld from your pay | $3,000.00 |
| Your refund | $1,220.00 |
An estimate for wages only, not a filed return. Federal only: no state refund.
Who gets it, and how much?
Who qualifies
- Qualified tips: voluntary cash or card tips from customers, including tips shared with you.
- Your job must be on the IRS list of jobs that customarily received tips (IRS.gov/TippedOccupations).
- You need a Social Security number valid for work, and a married couple must file jointly.
- You get it whether you take the standard deduction or itemize.
How much
- Up to $25,000 of tips a return.
- It shrinks by $100 for each full $1,000 of income over $150,000 ($300,000 married filing jointly), so the full $25,000 is gone at $400,000 ($550,000).
- It lowers income tax only. Social Security and Medicare are still taken from your tips.
When
- Tax years 2025 to 2028 only, unless Congress extends it.
- For 2026, your employer shows qualified tips on your Form W-2 in box 12, code TP.
A worked example
A single server on $45,000 with $12,000 of tips deducts all $12,000 in 2026, which cuts their federal income tax by $1,440.00. With $3,000 withheld, that is a $1,220.00 refund.
| Deduction | $12,000.00 |
|---|---|
| Tax it saves | $1,440.00 |
| Taxable income | $16,900.00 |
| Tax for the year | $1,780.00 |
| Estimate | $1,220.00 refund |
The result panel above starts on this example, step by step.
What does this estimate leave out?
- It is an estimate, not tax advice and not a filed return.
- State refunds: no state income tax is included, in any state. It is your federal refund only. States decide for themselves whether to follow the new federal deductions, and many do not.
- Self-employment income and self-employment tax, investment income (interest, dividends, capital gains) and any other income besides wages.
- Credits other than the child tax credit and the credit for other dependents: no earned income credit, education credits or child care credit.
- The Additional Medicare Tax (for one job it is withheld as it is owed), the 37% bracket’s trim of itemized deductions, and the route to the refundable child credit for families with three or more children and very low pay.
What else can I work out?
- Tax refund calculator Free 2026 tax refund calculator with the new deductions for tips, overtime, seniors and car loan interest, and the $2,200 child tax credit. No sign-up.
- Child tax credit calculator Work out your 2026 child tax credit: $2,200 a child under 17, up to $1,700 of it refundable, $500 for other dependents, and the income limits.
- No tax on overtime calculator Work out the 2026 no tax on overtime deduction: the “half” of time-and-a-half, up to $12,500 ($25,000 joint), the income limit, and your refund.
- Senior deduction calculator Work out the 2026 senior deduction: $6,000 for each person 65 or over, how it shrinks above $75,000 of income, and your refund.
- Car loan interest deduction calculator Work out the 2026 car loan interest deduction: up to $10,000 of interest on a new US-assembled car, the income limit, and your refund.
- Paycheck calculator 2026 Take-home pay per paycheck in 19 states, with 401(k), HSA and every pay schedule.
- Pay by job BLS pay and take-home for 830 jobs, to fill in your wages.
How withholding works: the W-4 form.
Questions about the no tax on tips
How much tip income is tax free?
Up to $25,000 of qualified tips a year comes off your taxable income for federal income tax. In our example, $12,000 of tips saves $1,440.00.
Is there an income limit for no tax on tips?
Yes. The deduction shrinks by $100 for each full $1,000 of income over $150,000 ($300,000 married filing jointly).
Do I still pay Social Security and Medicare on tips?
Yes. The deduction lowers federal income tax only.
Which years does no tax on tips cover?
Tax years 2025 to 2028.
Do I need to itemize?
No. You can take it with the standard deduction or with itemized deductions. You need a valid Social Security number, and a married couple must file jointly.