What does no tax on tips mean?
Starting in 2025, there's a deduction for qualified tips income. This has sometimes been called, "no tax on tips". You can deduct up to $25,000 of your tips income.
To qualify, you'll need to:
We'll ask you how much of your income is from qualified tips when you enter income on your W-2, 1099-MISC, 1099-NEC, 1099-K, or unreported tips.
To take the deduction if you are self-employed or an independent contractor, you'll need a 1099-MISC, 1099-NEC, or 1099-K.
To qualify, you'll need to:
- Have qualified tips income
- Have a Social Security number
- Be unmarried or file jointly with your spouse if you are married
We'll ask you how much of your income is from qualified tips when you enter income on your W-2, 1099-MISC, 1099-NEC, 1099-K, or unreported tips.
To take the deduction if you are self-employed or an independent contractor, you'll need a 1099-MISC, 1099-NEC, or 1099-K.
