No Tax on Tips and Overtime Calculator (2026)

Find out how much federal income tax the new tips and overtime deductions could save you. Takes about 20 seconds.

Updated October 2026 ยท Uses 2026 IRS figures

Wages including tips and overtime, before tax.
Voluntary cash and card tips. Enter 0 if none.
Only the extra half of time-and-a-half. Enter 0 if none.

Your result will appear here.

How the deductions work

For tax years 2025 through 2028, workers can deduct up to $25,000 of qualified tips, and up to $12,500 of overtime pay ($25,000 if married filing jointly). Both deductions shrink by $100 for every $1,000 your income is above $150,000 ($300,000 if married filing jointly).

The overtime deduction covers only the premium part of overtime. If you earn $18 an hour and $27 for overtime hours, only the extra $9 per overtime hour counts.

The deductions lower your federal taxable income. They do not make the money tax-free for Social Security and Medicare.

2026 federal brackets used here

RateSingleMarried filing jointly
10%up to $12,400up to $24,800
12%to $50,400to $100,800
22%to $105,700to $211,400
24%to $201,775to $403,550
32%to $256,225to $512,450
35%to $640,600to $768,700
37%aboveabove

Standard deduction for 2026: $16,100 single, $32,200 married filing jointly (IRS Rev. Proc. 2025-32).

Worked examples

All examples are for a single filer with 2026 figures. Each income figure already includes the tips or overtime.

$40,000 income with $15,000 in tips. Without the deduction, federal income tax is $2,620. With it, taxable income drops to $8,900 and tax is $890. You save $1,730.

$120,000 income with $20,000 in tips. Tax falls from $17,570 to $13,170, a saving of $4,400. The saving is bigger because those dollars would have been taxed at 22%.

$175,000 income with $25,000 in tips. Income is $25,000 over the $150,000 line, so the limit shrinks by $2,500 to $22,500. Tax falls from $30,734 to $25,334, a saving of $5,400.

$55,000 income with $4,000 of overtime premium. Tax falls from $4,420 to $3,940, a saving of $480.

Why the saving depends on your bracket

A deduction lowers your taxable income, so its value is the deducted amount times your top tax rate. $10,000 of deductible tips saves about $1,000 at 10%, $1,200 at 12% and $2,200 at 22%.

The deductions only reduce federal income tax. Social Security and Medicare tax are still owed on the full amount, and your state may have its own rules.

Common mistakes

What this calculator leaves out

It does not check whether your job qualifies. It uses your total income as a stand-in for the income measure used in the phase-out. It ignores credits, other deductions and state tax, and it supports single and married filing jointly only.

Questions

Who counts as a tipped worker?

Tips must come from an occupation that customarily received tips before 2025. The IRS publishes the list of qualifying occupations.

Does this include state tax?

No. This calculator covers federal income tax only. Your state may treat tips and overtime differently.

Which income do I enter?

Enter your total yearly income, including the tips and overtime. We use it as an estimate of modified adjusted gross income for the phase-out.

Do the deductions last forever?

No. They apply to tax years 2025 through 2028.

Will my paycheck get bigger?

It can. The 2026 Form W-4 accounts for these deductions, so you can submit an updated one and your employer must use it. If you do not, the benefit shows up when you file your return.

Sources and review

Last reviewed October 2026. Brackets and standard deduction: IRS Revenue Procedure 2025-32. Tips and overtime rules follow IRS guidance on the 2025 tax law changes.

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