Calculate your tips deduction under Schedule 1-A. Service industry workers—waiters, bartenders, hairdressers, and more—can deduct up to $25,000 in qualifying tip income.
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The Schedule 1-A tips deduction is a new above-the-line tax deduction introduced for tax year 2025. It allows qualifying service workers to deduct tip income from their taxable income, potentially saving thousands in federal taxes.
This deduction recognizes the unique income structure of tipped workers and provides significant tax relief. Unlike itemized deductions, this is an adjustment to income, meaning you can claim it even if you take the standard deduction.
Tips must have been received on or after January 20, 2025 to qualify. The deduction covers various forms of tip income including cash tips, credit card tips, and tips received through tip pooling arrangements.
Enter your total tip income from W-2 Box 7 (Social Security Tips) or calculate your self-employment tips
Specify when tips were received (only tips after January 20, 2025 qualify)
Our calculator automatically determines the qualifying amount based on IRS rules
Apply the $25,000 cap and any applicable phase-out limits based on your income
View your total tips deduction on Line 13 of Schedule 1-A
Scenario: Maria works as a server at a restaurant. Her W-2 shows $32,000 in Social Security tips (Box 7). She received tips throughout 2025.
Total W-2 Tips
$32,000
Qualifying Period Ratio
~95%
Qualifying Tips
$30,400
Tips Deduction (L13)
$25,000
Maria's qualifying tips ($30,400) exceed the $25,000 cap, so she can deduct the maximum amount. At a 22% tax bracket, this saves her approximately $5,500 in federal taxes.
Our calculator automatically prorates tips based on the January 20, 2025 start date.
Supports both traditional employees and self-employed tip earners with different calculation modes.
See exactly how each line is calculated, from L4 through L13, with full IRS form references.
Tips that qualify include cash tips, credit/debit card tips, and tips from tip pools, as long as they were received on or after January 20, 2025. Both W-2 reported tips and self-reported cash tips can qualify. Tips must be from legal sources and properly reported.
The maximum tips deduction under Schedule 1-A is $25,000 for tax year 2025. This cap applies to the total amount of qualifying tip income you can deduct, regardless of how much you actually earned in tips.
No, both W-2 employees and self-employed individuals who receive tips can potentially qualify. The calculation method differs slightly—W-2 employees use Box 7 (Social Security tips), while self-employed individuals calculate tips from their business income.
Only tips received on or after January 20, 2025 qualify for the deduction. Our calculator automatically prorates your annual tips based on this date. If you have specific records of tips by date, you can enter the exact qualifying amount.
No, the tips deduction is an income tax adjustment only. Your Social Security tips are still reported for Social Security purposes, so your future benefits are not affected by claiming this deduction.
This calculator provides estimates based on the information you enter. It is designed to help you understand potential deductions but does not constitute tax advice.
All calculations must be independently verified before filing. The preparer of record bears full responsibility for the accuracy of any filed return. We assume no liability for errors or omissions.Read full disclaimer →
Our free calculator helps you estimate your Schedule 1-A deduction with a complete audit trail.