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Tax

No Tax on Tips Calculator (OBBBA 2025–2028)

Enter your annual reported tips to see your OBBBA tips deduction and actual federal tax savings for 2025–2028.

Updated July 2026 · Figures verified July 2026 (sources) · Editorial standards

Federal tax saved (TY2025)
$1,800
OBBBA tips deduction
$15,000
FICA still withheld
$1,148

Your tips

$
$

Key figures

Federal tax saved
$1,800
OBBBA tips deduction
$15,000
FICA still withheld
$1,148

Deducting your $15,000 of reported tips saves $1,800 of federal tax for TY2025 — and reporting them builds your Social Security record.Tips are not FICA-free: $1,148 of Social Security and Medicare tax (7.65%) still comes out, and most states still tax tip income. The $25,000 cap does not double for married couples.

Federal tax saved
$1,800
By KalkWiseVerified against official sources Updated July 2026

What is the no tax on tips calculator 2026?

In short

A server reporting $15,000 in tips on $55,000 total income deducts the full $15,000, saving about $1,800 of federal tax in the 12% bracket — but roughly $1,148 of FICA (7.65%) still comes out. The deduction caps at $25,000 per return and phases out above $150,000 single / $300,000 joint MAGI.

This calculator computes your OBBBA tips deduction for tax years 2025–2028: it applies the $25,000 per-return cap and the MAGI phase-out, converts the deduction into real federal tax savings at your bracket, and shows the FICA that still applies to every reported tip dollar.

How to use this calculator

  1. 1Enter your reported tips for the year — cash and card tips that appear in payroll.
  2. 2Enter total income (wages + tips + other income) — this drives the phase-out and your bracket.
  3. 3Pick your filing status — note the $25,000 cap does NOT double for married couples.
  4. 4Read the deduction, the federal tax saved, and the FICA still withheld.

The formula

deduction=min(tips,$25,000)−10%×MAGI excess
tax saved=tax(TI)−tax(TI−deduction)
FICA still due=tips×7.65%
Deduction = min(tips, $25,000) − 10% × max(0, MAGI − threshold), not below zero. Tax saved = tax(taxable) − tax(taxable − deduction). FICA still due = tips × 7.65%.
$25,000
— Per-return cap — the same for single and married filers
threshold
— $150,000 single / $300,000 joint MAGI
7.65%
— Social Security + Medicare — NOT eliminated by the deduction

Worked example

The scenario

gives

The result

Common use cases

  • Tipped workers estimating the real value of the 2025–2028 tips deduction
  • Servers and bartenders deciding whether reporting more cash tips still nets out positive (it usually does — and builds Social Security credit)
  • Dual-earner couples checking the shared $300,000 phase-out

Limitations & assumptions

  • Only tips in occupations the IRS lists as customarily tipped qualify; the deduction requires reported tips (payroll or Form 4137).
  • The $25,000 cap is per return — it does not double for married couples, and married filers generally must file jointly to claim it.
  • The phase-out is modeled as a continuous 10% of MAGI excess; the IRS worksheet steps by $1,000. FICA uses the flat 7.65%.
  • State income tax on tips is not modeled — most states still tax them.

Frequently asked questions

Federally, up to $25,000 of reported tips per return escapes income tax for 2025–2028 — but 7.65% FICA still comes out of every tip dollar, and most states still tax tips. A $15,000-tip server saves ~$1,800 of federal tax but still pays ~$1,148 of FICA.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.