Tip Income Tax Estimator (OBBBA No-Tax-on-Tips, 2026)
Estimated 2026 OBBBA tip deduction
Deductible tips: $20,000
Estimated federal income tax saved: $4,400
Cap $25,000; phaseout begins at $150,000 MAGI. FICA (Social Security + Medicare) still applies to tips.
Frequently Asked Questions
What does this estimator calculate?
It estimates the federal income tax you could save in 2026 from the OBBBA no-tax-on-tips deduction: the lesser of your qualified tips or $25,000, reduced if your MAGI exceeds the phaseout threshold, multiplied by your marginal federal rate.
Does the estimate include payroll (FICA) tax savings?
No. The OBBBA provision affects federal income tax only. Social Security and Medicare taxes still apply to tip income, so this tool does not show FICA savings.
Why might my deduction be less than $25,000?
Two reasons: (1) if your qualified tips are below $25,000, you can only deduct what you actually received; (2) above $150,000 (single) / $300,000 (joint) MAGI the deduction phases out.