Calculator
No Tax on Overtime Calculator
Estimate your federal income tax savings under the OBBBA overtime deduction.
Try it nowEstimate your tax savings from the OBBBA 'No Tax on Tips' provision for 2026. Under the One Big Beautiful Bill Act, W-2 employees and self-employed 1099 contractors in tipped occupations can deduct up to $25,000 in qualified tips from federal income tax, subject to phase-outs starting at $150,000 (single) or $300,000 (joint).
How to Use This Tool:
- Enter your annual tip income (up to $25,000 maximum deduction limit).
- Select your tax filing status: Single, Married Filing Jointly, or Head of Household.
- Provide your Modified Adjusted Gross Income (MAGI) to apply phase-outs.
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Important Financial Calculation Disclaimer & Sources
Scope & Estimative Nature:
- Applies only to federal income tax, not payroll (FICA) or state income tax.
- Available temporarily for tax years 2025 through 2028.
Official Data Sources:
- One Big Beautiful Bill Act (OBBBA) Legislative Text
- IRS Notice 2025-69: Qualified Tips for Self-Employed Workers
- IRS Guidelines on Qualified Tips and Schedule 1-A Reporting
Methodology:
- Inputs are normalized into numeric values in the browser.
- The matching FinanceUp calculation engine runs standard formulas for the selected tool.
- Results are formatted using United States currency, locale, and available country rules.
- Charts, tables, and result cards are derived from the same calculation output to keep the page internally consistent.
All calculations are estimates. Tax rates, retirement regulations, and investment fees change over time. Please verify critical values with an official professional advisor or reference the official publications cited above before taking action.
Guide & How-To
AI Overview
To calculate no tax on tips savings calculator in United States (2026): Estimate your tax savings from the OBBBA 'No Tax on Tips' provision for 2026. Under the One Big Beautiful Bill Act, W-2 employees and self-employed 1099 contractors in tipped occupations can deduct up to $25,000 in qualified tips from federal income tax, subject to phase-outs starting at $150,000 (single) or $300,000 (joint). The calculation is performed by applying the latest local rules, standard deductions, brackets, or compounding terms to your inputs to provide an instant, accurate estimate.
How Does the No Tax on Tips Deduction Work?
The 'No Tax on Tips' provision is an above-the-line deduction, meaning you can deduct qualified tips directly from your gross income to lower your Adjusted Gross Income (AGI). The maximum deduction is capped at $25,000. It is designed to benefit hospitality, service, and gig workers who earn a substantial portion of their income via tips.
Income-Based Phase-Outs?
The deduction phases out linearly for higher earners to ensure the benefit targets low- and middle-income workers. For single and Head of Household filers, the phase-out starts at a MAGI of $150,000 and is completely gone at $400,000. For Married Filing Jointly, it starts at $300,000 and completely phases out at $550,000.