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OBBBA Deductions
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Tax year 2026 · filed in 2027

Do your tips qualify for the deduction?

Your job has to be on the Treasury list of 71, and the money has to be a real tip. This checks both, then applies the cap and the phase-out.

Deduct up to $25,000Phases out above $150,000Tax years 2025–2028

Figures verified September 8, 2026Source: T.D. 10044 and Schedule 1-A

Step 1 — your occupation

Searches the official titles and the example job titles in the regulations, so “busser” and “barista” both resolve.

Browse all 71 occupations by category

Beverage and food service (100s)

Entertainment and events (200s)

Hospitality and guest services (300s)

Home services (400s)

Personal services (500s)

Personal appearance and wellness (600s)

Recreation and instruction (700s)

Transportation and delivery (800s)

Step 2 — is it actually a tip?

Answer for the money you are asking about. If some of your income is tips and some is service charges, run them separately.

Does the customer decide the amount?

A tip has to be an amount the payer chose. A percentage set by your employer or written into a contract is not.

Can the customer decline to pay it?

A tip is voluntary. If the customer had no way to refuse it, it is a charge.

Is it a mandatory service charge or auto-gratuity?

Auto-gratuity on large parties, resort service charges, contracted event gratuities.

Step 3 — your tips and income

The phase-out runs on modified AGI, which for most people is the same as AGI.

How were these tips earned?

No occupation picked yet.

OBBBA Deductions · obbbadeductions.com

Tips deduction worksheet — tax year 2026

Single · Prepared October 1, 2026

The three tests, as answered

  • Does the customer decide the amount? not answered
  • Can the customer decline to pay it? not answered
  • Is it a mandatory service charge or auto-gratuity? not answered

Pick an occupation to start.

Educational estimate only, not tax advice. It runs entirely in your browser and nothing you type is sent anywhere. The deduction is scheduled to expire after tax year 2028.

Estimate only, not tax advice. This site is general information, not tax advice. Figures are estimates and may not reflect the final IRS guidance for the tax year. Confirm your situation with a qualified tax professional or the IRS before filing.

Occupation list and tip tests from T.D. 10044; cap and phase-out from Schedule 1-A Part II. Figures on this site were last checked September 8, 2026. Produced by obbbadeductions.com — nothing entered into the calculator left the browser it was typed into.

What counts as a qualifying tip

All three tests have to be met. They come from the final regulations under T.D. 10044.

  • Paid voluntarily

    The customer sets the amount and can decline to pay it.

  • Paid in cash or a cash equivalent

    Card payments and mobile payments count.

  • Received directly or through a tip pool

    Both routes qualify.

The 71 listed occupations

Full index →

Hospitality and guest services300s

Source: T.D. 10044 — final regulations on occupations that customarily and regularly received tips, Treas. Reg. § 1.224-1(h) table 1. Published 2026-04-10, effective 2026-06-12. Read the regulations.

Questions

Is my job on the IRS list?
There are 71 occupations on the list, grouped into eight categories. The official titles are often broader than the job title you use day to day — “wait staff” covers cocktail servers and banquet staff, “fast food and counter workers” covers baristas. Search your title in the checker above; it also searches the example job titles printed in the regulations.
Does an automatic gratuity on a large party count?
No. An auto-gratuity is a mandatory service charge, and the final regulations confirmed explicitly that service charges do not qualify. This holds even where the customer cannot decline or modify the charge — being non-declinable is what disqualifies it, because a qualifying tip has to be an amount the customer chose to give.
What actually makes something a qualifying tip?
Three things together: the customer paid it voluntarily and could have declined; the customer determined the amount; and it was paid in cash or a cash equivalent, which includes card, gift card and mobile payment. Tips received through a tip pool qualify as well as tips handed to you directly.
How much can I deduct?
Up to $25,000 per tax return, regardless of filing status — it is not doubled on a joint return. The cap is applied first, and then the amount is reduced by $100 for every $1,000 of modified adjusted gross income above $150,000 ($300,000 on a joint return).
Do I have to itemize?
No. This deduction is available whether you itemize or take the standard deduction, and it is claimed on Schedule 1-A.
I am married. Can I file separately and still claim it?
No. A married taxpayer must file a joint return to claim the tips deduction at all. This is a statutory requirement, not a threshold you can work around.
Do I need to report cash tips to claim this?
Yes. The deduction reaches tips that were reported — on a Form W-2, on a 1099 or other payee statement, or by you on Form 4137 for unreported tip income. Cash you never reported is not a deduction waiting to be claimed; it is a reporting problem first.
Does this mean my tips are tax-free?
No. It is a deduction against income, not an exemption. Your tips are still income, they are still subject to Social Security and Medicare tax, and they may still be taxed by your state. The deduction reduces the federal income tax you pay on them, and only up to the cap.
What is the Treasury Tipped Occupation Code on my W-2?
From 2026 your employer reports a three-digit code identifying your occupation in box 14b, and your qualified tip amount in box 12 with code TP. The first digit tells you the category — 100s are beverage and food service, 800s are transportation and delivery.
How long does this deduction last?
It applies to tax years 2025 through 2028. It is scheduled to expire after tax year 2028. No deduction is allowed for any tax year beginning after December 31, 2028.