Free · no sign-up · nothing storedLaw checked 2 November 2026

No Tax on Tips and Overtime Calculator 2026

How much is the no tax on tips and overtime deduction?

For 2025 to 2028 you can deduct up to $25,000 of qualified tips and up to $12,500 of qualified overtime ($25,000 joint), whether or not you itemize. Only the premium half of time-and-a-half counts. Each deduction drops by $100 for each full $1,000 of MAGI over $150,000 ($300,000 joint). Social Security and Medicare still apply.

Many people think the whole overtime check, or Social Security and Medicare on tips, became tax-free. Neither is true: it is a federal income tax deduction, it covers only the overtime premium, and married couples must file jointly to claim it.

Enter your tips and overtime premium (or overtime hours and hourly rate) and your expected MAGI to see both deductions and an estimate of the tax saved.

Use the calculator All free tools

Built by Muhammad Shahzeb Anwar, MSc Industrial and Organizational Psychology. US federal income tax rules for tax year 2026 (the deductions run 2025-2028).

The calculator

Work out your 2026 deductions

Runs in your browser. Nothing you type is stored or sent anywhere.

You

All income, including the tips and overtime, minus adjustments.
Servers, bartenders, hair stylists, rideshare and delivery drivers and about 70 others.

Tips and overtime in 2026

Tips customers chose to give (cash, card, tip pool). Not service charges.
On the 2026 W-2 this is box 12, code TT.
Fill this and your hourly rate to estimate the premium instead.

The two deductions, side by side

Tips: up to $25,000 a return of qualified tips: tips customers give freely, in cash or by card, including tips shared through a tip pool, in an occupation on the IRS list of jobs that customarily received tips on or before 31 December 2024. Mandatory service charges and automatic gratuities do not count. Self-employed people in a specified service trade or business (and employees of one) cannot take it, and for the self-employed the deduction cannot exceed the net profit of the business. Overtime: up to $12,500 ($25,000 joint) of qualified overtime compensation, the part of FLSA-required overtime pay above the regular rate. Both need a social security number valid for work, and married people must file jointly.

Worked example: overtime

Regular rate $18 an hour, 46 hours in a week. The 6 overtime hours pay 6 x $27 = $162, of which 6 x $18 = $108 is straight time and 6 x $9 = $54 is the FLSA premium. Only the $54 counts. If the employer pays double time ($216 for those hours), the qualified amount is still $54: the IRS says only the amount the FLSA requires counts, so double time, daily overtime and weekend premiums in a week under 40 hours are left out. For 2026 the employer reports the figure on Form W-2, box 12, code TT, and the IRS says only that reported amount can be used.

Worked example: the phase-out

Single, MAGI $172,400, qualified tips $14,000. MAGI is $22,400 above $150,000. The reduction counts only full $1,000 steps: 22 steps x $100 = $2,200, so the tips deduction is $11,800. At MAGI of $150,999 nothing comes off; at $151,000, $100 does. A joint return starts the phase-out at $300,000. The tips and overtime deductions are each reduced by the same amount.

What it does not change

Tips and overtime are still income. Social Security and Medicare are still withheld (7.65% for employees), and self-employed tips still carry self-employment tax. State income tax follows each state's own rules. The deduction lowers taxable income, so what it saves depends on your bracket: a $10,000 deduction saves $1,200 at 12% and $2,200 at 22%.

What the full checker adds

The No Tax on Tips + Overtime Checker 2026 (Excel, Google Sheets and an offline web version) adds the full IRS occupation list with codes, a shift-by-shift tips log (cash, card, tip pool, tip-outs, service charges kept apart), a workweek overtime log that splits the FLSA premium from double time, the self-employed profit limit, itemized deductions, and a plain-words check of every rule on your numbers.

Before you rely on this

What this will not tell you

An estimate of the deductions and the rules, not tax advice and not instructions for a form. It assumes the standard deduction and ordinary income, does not cover the self-employed profit limit, specified service businesses or FLSA exemptions (assumed met), and treats MAGI as the figure you enter. Nothing you type leaves your browser.

Questions

Questions people actually ask

Is all my overtime tax-free now?

No. Only qualified overtime compensation counts: the FLSA premium above your regular rate (the 'half' of time-and-a-half), up to $12,500 ($25,000 joint), and it is an income tax deduction, not an exemption.

Do I still pay Social Security and Medicare on tips?

Yes. The deductions are federal income tax only. Social Security and Medicare (7.65% for employees) still apply to tips and overtime.

What is the income limit for no tax on tips?

The deduction drops by $100 for each full $1,000 of modified AGI above $150,000, or $300,000 on a joint return.

Can I take the deduction if I don't itemize?

Yes. Both deductions are available whether you take the standard deduction or itemize.

Can married couples filing separately claim it?

No. Married people must file a joint return to claim either deduction.

Which jobs count for no tax on tips?

Occupations on the IRS list of jobs that customarily and regularly received tips on or before 31 December 2024: about 70, from bartenders and wait staff to hairstylists, rideshare drivers and delivery people.

How long does no tax on tips last?

The tips and overtime deductions apply to tax years 2025 through 2028.

Where every rule comes from

Sources

Checked against the IRS forms, fact sheets and the tipped-occupations list on 2 November 2026. If a source below has moved on, the source wins over this page.

  1. Schedule 1-A (Form 1040), Additional Deductions: https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf
  2. 2026 Schedule 1-A (Form 1040), early release draft: https://www.irs.gov/pub/irs-dft/f1040s1a--dft.pdf
  3. IRS fact sheet: tax deductions for working Americans and seniors: https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
  4. IRS FS-2026-13: questions and answers on qualified overtime compensation: https://www.irs.gov/pub/taxpros/fs-2026-13.pdf
  5. IRS: occupations that customarily and regularly received tips: https://www.irs.gov/tippedoccupations
  6. Rev. Proc. 2025-32, 2026 inflation adjustments: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
Citation

Cite this tool

Free to use and free to quote. If a figure here is useful in something you are writing, a link back is all that is asked.

Muhammad Shahzeb Anwar, MSc Industrial and Organizational Psychology. No Tax on Tips and Overtime Calculator 2026. Shahzeb Speaks. https://www.shahzebspeaks.com/no-tax-on-tips-calculator/

Every free tool

The other free tools

The tools hub →

Each one answers a single question and refuses the ones it cannot. All free, none asks for an email address.

Pakistan employment law6 tools

Gratuity Calculator PakistanProvince by province, from the Standing Orders themselves, with the tax-free part. Final Settlement Calculator PakistanLast salary, unused leave, notice pay and gratuity in one statement. Minimum Wage Checker PakistanEach province's notified figure, the arrears it creates, and EOBI on top. Maternity Leave Calculator PakistanWeeks, dates, pay and paternity leave under each province's law. Harassment Act Compliance Checklist (Pakistan)Is your inquiry committee valid, and what else the 2010 Act requires. Punjab Labour Code 2026 CalculatorGratuity with the new caps, notice, unused leave and overtime under the 2026 Code.

India3 tools

Labour Codes Applicability Checker (India)Which duties under India's four Labour Codes apply at your headcount. Leave Encashment Calculator: New Labour Code (India)Annual leave earned, the 30-day carry-forward cap and encashment under the OSH Code. POSH Internal Committee Checker and Annual Report Builder (India)Internal Committee composition, the complaint timeline and the annual report.

UK employment law4 tools

Employment Tribunal Time Limit CalculatorThe new six-month limit, the old three-month one, and the Acas clock-stop. Unfair Dismissal Qualifying Period CheckerTwo years until 2027, six months after, with the statutory notice extension. All Reasonable Steps Checker: Sexual Harassment Duty (UK)Score your prevention against the EHRC's eight steps before 30 October 2026. 48-Hour Week Average CalculatorThe 17-week average, with leave put back in the way the regulations require.

United States5 tools

Pay Transparency Laws by State CheckerTick the states and cities a job touches; see what the posting must say. AI Hiring Laws by State CheckerNYC, Illinois, California, Colorado, Connecticut and more: what applies, and when. Non-Compete Laws by State Checker (2026)State bans, 2026 pay thresholds and the conditions on non-competes. WARN Act and State Mini-WARN CalculatorIs a layoff covered, how much notice, and the state rules on top. FMLA Eligibility CalculatorThe four federal tests, and how many of the 12 weeks are left.

Canada4 tools

Termination and Severance Pay Calculator CanadaStatutory notice and severance in all 14 jurisdictions, with group terminations. Vacation Pay Calculator CanadaVacation time and pay in all 14 jurisdictions, including PEI's 2026 change. Statutory Holiday Pay Calculator CanadaHoliday pay and pay for working the holiday, in all 14 jurisdictions. Job Posting Compliance Checker (Canada)Ontario's pay range cap, AI and Canadian-experience rules, plus BC, PEI and NB.

EU regulation and hiring law5 tools

EU AI Act HR and Recruitment CheckerIs your hiring or HR AI high-risk, banned or neither, and what applies when. EU Pay Transparency Directive CheckerWhich country has transposed it, what applies to you, and your first report date. EU Pay Transparency Gap CalculatorAll seven Article 9 indicators from one pasted list, and the 5% flag. NYC Bias Audit Impact Ratio CalculatorLocal Law 144's selection and scoring rates, by sex, race and both. Interview Question CheckerPaste your questions: which ones are unlawful, risky or fine, by country.

I/O psychology and psychometrics14 tools

Content Validity Ratio (CVR) CalculatorLawshe's CVR for every item, with exact critical values and the CVI. Aiken's V CalculatorAiken's V for each item, with its confidence interval and exact p-value. Standard Error of Measurement and Banding CalculatorSEM, SED and the band of scores that cannot be told apart from the top. Taylor-Russell CalculatorValidity, selection ratio and base rate into the share of hires who succeed. rwg and ICC Calculator (Within-Group Agreement)Within-group agreement and ICCs before you aggregate team or climate scores. Motivating Potential Score CalculatorThe Job Characteristics Model's MPS, and which redesign lever moves it most. Vroom Expectancy Theory CalculatorVroom's motivational force for several choices and outcomes, side by side. Item Analysis Calculator (Difficulty, Discrimination, KR-20)Difficulty, discrimination, distractors and KR-20 for a multiple-choice test, from pasted answers. 9-Box Grid Generator (Performance and Potential)Paste names and two ratings; get the plotted 9-box grid and the rating problems to fix first. Copenhagen Burnout Inventory (CBI) CalculatorThe free 19-item CBI with official scoring, for yourself or a whole team. Composite Reliability, AVE and HTMT CalculatorCR, AVE, MSV, Fornell-Larcker and HTMT for every construct, from loadings and correlations. Intraclass Correlation (ICC) CalculatorWhich ICC you need, all six forms with confidence intervals, and the sentence for your write-up. eNPS Calculator with Margin of ErroreNPS with its margin of error, and whether the change since last time is real. Spearman-Brown Prophecy CalculatorHow reliable a longer or shorter test would be, and how many items reach a target.

US money and tax (2026)4 tools

Quarterly Estimated Tax Calculator 2026Self-employment and income tax for 2026, the safe-harbor amount, and what to pay each quarter. Mileage Deduction Calculator 2026The two 2026 IRS mileage rates, split by date, and how much of each gig payout to set aside. Dependent Care FSA vs Tax Credit Calculator 2026The $7,500 FSA against the 50% child care credit: what each comes to on your numbers. Parent PLUS Loan Calculator 2026-27Net price, the gap after the student's loan, Parent PLUS under the 2026 limits, and the payment.

UK money and tax (2026-27)7 tools

Making Tax Digital Income Tax CheckerThe £50,000, £30,000 and £20,000 tests on gross income, and your start date. Online Selling Tax Checker (UK)Trading or not, the £1,000 allowance, and what the platform report means. Payments on Account CalculatorWhat Self Assessment asks for in January and July, and the first-year surprise. 60% Tax Trap and £100k Childcare Cliff CalculatorAdjusted net income, the £100k cliff and the rate on your next £1,000. Landlord Tax Calculator 2027Your rental tax now, under the 22% law and the 24% Budget plan. Care Home Fees: How Long Will Savings Last?Months until savings reach £23,250, and the weekly top-up after that. UK Maternity Pay Calculator 2026-27Statutory Maternity Pay week by week from your start date, with the week-7 drop.

Canada money and tax4 tools

TFSA Contribution Room CalculatorYour TFSA room, the over-contribution tax, and your room on 1 Jan 2027. GST/HST $30,000 Small Supplier CalculatorOne quarter or four: when the $30,000 GST/HST limit makes you register. FHSA + HBP Down Payment CalculatorFHSA, the $60,000 HBP and savings against the minimum down payment, CMHC and the GST rebate. EI Maternity and Parental Leave Calculator (Canada)EI maternity and parental benefits per week and in total, standard or extended, with dates.

Online sellers3 tools

Etsy Profit CalculatorEvery Etsy fee by country, the profit, and what an Offsite Ads sale leaves. TikTok Shop Fee CalculatorFee, creator commission, returns and ads: what one order really leaves you. Reseller Profit CalculatorWhat a flip really makes after eBay, Poshmark, Mercari, Depop, Vinted, Facebook or Etsy fees.

Household planners4 tools

Wedding Cost Per Guest CalculatorFixed vs per-guest wedding costs: what each guest really adds and how many your budget covers. Balance Transfer 0% APR Payoff CalculatorWill a 0% balance be gone before the promo ends? The monthly payment that clears it. Christmas Savings CalculatorYour Christmas budget split into weekly, every-2-weeks or monthly amounts, with the dates. Puppy First-Year Cost CalculatorWhat a new puppy costs in year one: one-time costs, monthly budget, total.

Hiring and selection4 tools

Adverse Impact CalculatorThe four-fifths ratio, and how many selections would clear it. Selection Accuracy CalculatorWhat a hiring test is worth once the base rate is included. Utility Analysis CalculatorWhat a better hiring method is actually worth, in money. Range Restriction CalculatorWhy your own data makes your test look worse than it is.

Absence, pay, turnover and engagement4 tools

Bradford Factor CalculatorWhy five one-day absences score twenty-five times one long one. Pay Gap CalculatorMean against median, and what their disagreement tells you. Employee Turnover Cost CalculatorFive lines, and the largest is the one nobody invoices for. Survivorship Bias CalculatorDid the score rise, or did the unhappy people leave?

Reading a number without being fooled by it4 tools

Regression to the Mean CalculatorWhy the month after a record month always disappoints. Review Rating Confidence CalculatorIs 4.6 from twelve reviews better than 4.4 from three hundred? Combined Rate Trap CalculatorBoth groups improved and the total fell. Simpson's paradox. Multiple Comparisons CalculatorRun twenty tests and one will win on its own.

Check every rule, not just the number

The No Tax on Tips + Overtime Checker 2026 is an Excel and Google Sheets workbook plus an offline web version: the full IRS occupation list, a shift tips log, a workweek overtime log, the self-employed limit and a rule check on your numbers. An estimate, not tax advice.

Get the full checker, $12