NEW 2025 LAW — Up to $25,000 in tips are now federal tax-free
Kentucky Tip Tax
Calculator 2026
In Kentucky, the No Tax on Tips law removes federal tax on up to $25,000 of tips. You also save on 4.5% state income tax.
No Tax on Tips Law Federal + State 2026 Rules 100% Private
Max Tip Deduction
$25,000
Effective From
Jan 1, 2025
Income Phase-Out
$150,000
Your State Tax
4.5%
TIP TAX CALCULATOR
2026 NO TAX ON TIPS LAW
Tax Deduction Applied
$15,000
YOUR SAVINGS
KENTUCKY · 2026
Tips Earned$15,000
Tax-Free Deduction$15,000
Taxable Tips Remaining$0
Federal Tax Saved+$2,585
Kentucky State Tax Saved+$675
FICA (still owed on tips)-$1,148
Total Tax Saved+$3,260
No Tax on Tips in Kentucky — 2026 Guide
The No Tax on Tips law, effective January 1, 2025, allows tipped workers to deduct up to $25,000 in tip income from their federal taxable income. This applies to workers in traditional tipping industries — restaurants, hotels, salons, and more.
In Kentucky, the federal deduction reduces your 4.5% state tax burden too — since many state tax calculations start from federal adjusted gross income.
Compare tip taxes across all 50 states →