01/27/2026
TAX TIP - NO TAX ON TIPS
From the IRS: Employees and self-employed individuals may deduct qualified tips received in certain qualified occupations, such as wait staff, bartenders, salon workers, personal trainers, gig economy workers, and many more who customarily and regularly receive tips might qualify.
Tips earned on or after December 31, 2024, and are reported on a Form W-2, Form 1099, or other statement furnished to the individual or reported directly by the individual on Form 4137 can be deducted.
“Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing
Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income, without regard to this deduction, from the trade or business in which the tips were earned
The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)
