No Tax on Tips Calculator (2025–2028)

The OBBBA "no tax on tips" provision excludes up to $25,000 of qualifying tip income from federal income tax for tax years 2025 through 2028. FICA and state income tax are unaffected.

Guidance, not advice. This calculator runs the rules as published, it doesn't assess your circumstances. Your actual tax may be affected by factors it doesn't cover (deductions, credits, filing status nuances, state-specific adjustments). Always seek financial or tax advice from a qualified CPA, Enrolled Agent, or tax attorney, or contact the IRS. Read our editorial scope →

Temporary provision — expires after tax year 2028

Temporary provision — expires after tax year 2028. Without further legislation, this benefit is not available for 2029 and beyond.

Your situation

Cap is $25,000 of tip income; phases out above $160,000 MAGI.

Filing status

Annual tip income (W-2 box 7 + reported)

MAGI (modified adjusted gross income)

Other taxable income (for marginal-rate estimate)

Your estimated savings

Capped tip income

$18,000

MAGI phase-out

−$0

Excludable

$18,000

Federal tax savings (22% bracket)

$3,960

FICA still applies

Tips remain subject to Social Security and Medicare tax. Your share of FICA on the full $18,000 of tips is approximately $1,377 (7.65%), unchanged by this provision. The employer share is also still owed.

Only "qualifying" occupations (those customarily and regularly receiving tips before 2025) are eligible. Reported tips must appear on Form W-2 to be excluded.

Tax year 2026 · USD · OBBBA permanent law

Formula: Federal savings ≈ min(tips, $25,000, phase-out remainder) × marginal federal rate

Assumptions

Cap of $25,000 of tip income excluded from federal income tax (above-the-line under §224).
Hard MAGI cap modeled at $160,000 with $100/$1,000 simplified phase-down.
Provision sunsets after the 2028 tax year unless extended.
Tips still subject to FICA (employee 7.65%) and to state income tax in non-conforming states.

Estimates only — not tax advice. Brackets, deductions and thresholds reflect the locked 2026 federal configuration. State amounts use each state's posted 2026 top-line rules and may differ from a full state-form computation. Always confirm complex situations with a qualified CPA, EA, or tax attorney.