The new “no tax on tips” deduction lets rideshare drivers, delivery couriers and other tipped gig workers deduct up to $25,000 of customer tips from their federal taxable income for 2025 through 2028. It isn’t as simple as the name sounds: for 1099 workers it’s capped at your gig profit, it phases out at higher incomes, and you still owe self-employment tax on every tip. This no tax on tips calculator shows your 2026 deduction, the income tax it actually saves, and what you still owe.
No Tax on Tips Calculator (2026)
See how much of your app tips you can deduct under the new federal tips deduction, how much income tax that saves you, and the Social Security and Medicare tax you still owe on them.
1. Your tips and income for 2026
How your deduction is figured
| Tips you entered | $0 |
| − App tips above your gig net profit (not deductible) | $0 |
| − Amount over the $25,000 cap | $0 |
| − Income phase-out ($100 per full $1,000 of income over the limit) | $0 |
| Your tip deduction | $0 |
| Federal income tax without the deduction | $0 |
| Federal income tax with the deduction | $0 |
| Income tax you save | $0 |
- Only income tax goes down. As a 1099 worker you still pay 15.3% self-employment tax (Social Security and Medicare) on tips, just like on the rest of your profit.
- It’s a deduction, not a refund. It lowers your taxable income, so it saves you your tax rate times the deduction. If your income is low enough that you already owe little or no income tax, it may save you nothing.
- Capped at your gig profit. For self-employed workers, the deduction can’t be more than the net profit from the gig work where you earned the tips. Tracking your mileage keeps your profit accurate.
- Your job has to be on the IRS list. Rideshare drivers and delivery workers are on it. Tips must be voluntary and show up on your 1099 or W-2 (or be reported by you).
- Married? File jointly. Married filing separately can’t take it. Works with the standard deduction; no itemizing needed. It runs 2025 through 2028.
- Your state may not follow it. Many states still tax tips. Florida, Texas and other no-income-tax states aren’t affected.
Put your numbers to work
Estimate for planning only, not tax advice; consult a CPA for your situation. Uses 2026 federal figures: $25,000 cap, phase-out above $150,000 of modified AGI ($300,000 joint), 2026 brackets and standard deduction, the 20% QBI deduction for a sole proprietor with no employees, and self-employment tax at 15.3% on 92.35% of profit (Social Security part capped at $184,500). Assumes no other deductions or credits and that your occupation qualifies. Income tax only; state tax not included. See all calculators.
No tax on tips for gig workers: common questions
Do Uber, DoorDash and Instacart drivers qualify for no tax on tips?
Yes, in most cases. Rideshare drivers and goods delivery workers are on the IRS list of occupations that customarily receive tips, and self-employed workers can claim the deduction. The tips must be voluntary customer tips that are reported on your 1099 or by you, and the deduction can't be more than your net profit from that gig work.
Do I still pay tax on tips under the new law?
Yes. The deduction only lowers federal income tax. As a 1099 worker you still owe 15.3% self-employment tax (Social Security and Medicare) on your tips, and many states still tax them. Tips also still count as income for the phase-out, which starts at $150,000 of modified AGI ($300,000 if married filing jointly).
How do I claim the no tax on tips deduction?
You claim it on Schedule 1-A with your Form 1040, whether you take the standard deduction or itemize. Self-employed workers still report all their tips as income on Schedule C, then deduct the qualified amount on Schedule 1-A. Starting with 2026, 1099 forms show qualified tips separately. Married couples must file jointly to claim it.