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Qualified Tips Deduction CalculatorUp to $25,000 (IRC 224)

What do these figures come to once the work is shown?

Deduction for qualified tips after the $25,000 cap and the $100 per $1,000 phase-out above $150,000 or $300,000 of MAGI.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Qualified tips deduction
$16,800
Applies to taxable years 2025 through 2028
Tips after the $25,000 cap
$18,000
Phase-out reduction
$1,200
$100 for each whole $1,000 of MAGI over the threshold
Drawn to one scale
Qualified tips deduction$16,800
Tips after the $25,000 cap$18,000
Phase-out reduction$1,200
All results
MeasureResult
Qualified tips deduction$16,800
Tips after the $25,000 cap$18,000
Phase-out reduction
$100 for each whole $1,000 of MAGI over the threshold
$1,200
How this was worked out
Work shownrecomputed as you type
Capped tips = lesser of qualified tips and $25,000
Reduction = $100 for each whole $1,000 of modified AGI over $150,000 ($300,000 joint)
Deduction = capped tips - reduction, not below zero

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Capped tips = lesser of qualified tips and $25,000
  • Reduction = $100 for each whole $1,000 of modified AGI over $150,000 ($300,000 joint)
  • Deduction = capped tips - reduction, not below zero

How it works

Section 224 lets you deduct qualified cash tips, up to $25,000 a year, for taxable years beginning after 2024 and before 2029. The tips must be voluntary, and the occupation must be one that customarily received tips on or before December 31, 2024. Tips from a specified service trade or business do not qualify, and a married taxpayer must file jointly.

The deduction falls by $100 for each $1,000 of modified AGI over $150,000, or $300,000 on a joint return. The statute says "for each $1,000" without "or portion thereof", and Schedule 1-A drops any part of a $1,000 step, so a partial thousand does not reduce the deduction. Self-employed tips are limited by the income of the business.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Which tips qualify?

Cash tips, including charged tips, in an occupation that customarily and regularly received tips on or before December 31, 2024, reported on information statements or Form 4137.

Can overtime and tips both be deducted?

They are separate deductions with separate caps. Qualified overtime compensation excludes any qualified tip.

Is a Social Security number required?

Yes. The return must include it.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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