No Tax on Tips Calculator 2026
See how much you save under the No Tax on Tips exemption — up to $25,000 in tip income tax-free per year.
- Up to $25,000 in tip income is exempt from federal income tax in 2026
- Workers must earn $160,000 or less in wages to qualify
- FICA taxes (Social Security 6.2% + Medicare 1.45%) still apply to all tips
- Tips must still be reported on your tax return — exemption removes income tax only
- A server earning $25,000 in tips saves roughly $2,500–$5,500 in federal tax
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Important: Current Status of No Tax on Tips
The No Tax on Tips exemption was signed into law as part of the One Big Beautiful Bill (July 4, 2025). This calculator shows your estimated savings under the $25,000 annual cap. Consult a tax professional for your specific situation.
No Tax on Tips — FAQ
Who qualifies for No Tax on Tips?
Workers in traditionally tipped occupations qualify: servers, bartenders, hotel staff, hair stylists, valets, and similar roles. The income threshold is $160,000 or less in wages.
Is there a cap on tax-free tip income?
Yes, the exemption caps at $25,000 per year in tip income. Tips above $25,000 are still taxed normally.
Does it eliminate FICA on tips too?
No, Social Security (6.2%) and Medicare (1.45%) still apply to tips. Only federal income tax is exempt. This calculator shows federal income tax savings only.
Do I still need to report tips?
Yes, all tips must still be reported to your employer and on your tax return. The exemption means they are not subject to federal income tax, but they still count as income for Social Security.
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