What is the new tax law for tips?
Federal tax laws now let you deduct certain tip income, even if you take the standard deduction (instead of itemizing your deductions).
You may be able to deduct up to $25,000 of qualified tips from your federal income tax. You will still pay Social Security and Medicare taxes on all your tips.
Qualified tips are:
Voluntary cash tips from customers
Tips added to credit or debit card charges
Your share of a tip pool
Included as income on your W-2 or 1099, or reported by you on your tax return through Form 4137
Qualified tips aren’t:
Mandatory service charges added to a bill
Non-cash gifts like tickets or gift baskets
Who can claim this deduction?
There are about 70 traditional tipped roles that qualify, including servers, bartenders, hairstylists, and delivery drivers. You can see the full list of qualified jobs at this PDF from the Treasury Department. For 2025 only, specified service trade or business workers (like a law firm or doctor's office) qualify. Jobs that involve prostitution, pornography, and illegal activities are excluded.
You must also have a valid Social Security number to take the deduction.
The deduction you receive will phase out if your modified adjusted gross income (MAGI) is above:
$150,000 for Single, Head of Household and Qualifiying Surviving Spouse filers
$300,000 for Married Filing Jointly filers
Married couples must file a joint return to claim this deduction. Married Filing Separately doesn’t qualify.
If you’re self-employed, your tips deduction for each business is limited to your net income from that business.
Finding your tip info
Where you find your tip income info depends on your type of employment.
I’m not self-employed
Box 14 on your W-2
Your final pay stub for 2025
A statement from your employer or payroll service with your tips
Box 7 of your W-2 (Social Security tips)
Amounts you reported to your employer on Form 4070, or any other form you used to report tips to your employer
A tip log or other record you kept for tips not reported to your employer
See How do I enter tips in TurboTax online? for more info
I’m self-employed
Your 1099 forms may not show tips separately. Use your daily tip logs or business records to find your total tips. Keep these records in case the IRS has questions later.
When you enter your income info, we'll ask questions about your tips and apply the deduction.
