Tip Tax Calculator
Reported tips are wages for tax purposes. Your employer withholds income tax and FICA on tips once they total $20 or more a month. This calculator itemizes the layers — including the new 2026 federal deduction that removes up to $25,000 of tip income from federal tax.
Quick answer: On $10,000 of tips, FICA takes $765, and after the 2026 deduction the federal income tax can be near zero for moderate incomes — versus $1,000–$2,200 before the deduction. State tax, where applicable, still uses your ordinary rate.
Cash + card tips you report to your employer
12–15% is typical for moderate tip incomes
| Tips | $15,000.00 |
| Federal income tax without deduction (15% effective) | − $2,250.00 |
| Federal income tax with 2026 deduction | − $0.00 |
| FICA (7.65%)still applies to every tip dollar | − $1,147.50 |
| State tax (custom 5%) | − $750.00 |
Estimate for tax years 2026–2028. The deduction covers tips customarily received in qualifying occupations, caps at $25,000.00 per year and phases out above $150K MAGI ($300K joint). Effective-rate input approximates your bracket math; your return decides the real number. Not tax advice.
| FICA on tips | 7.65%, withheld by your employer on reported tips |
|---|---|
| Federal income tax | Ordinary rates, minus the 2026 deduction (up to $25,000 of tips) |
| Reporting rule | Tips under $20/month still taxable; report all tips for the deduction to apply |
Common uses
- Annualize your tips and see the real tax burden
- Check whether unreported cash tips create year-end surprises (they do — report them)
- Compare two job offers with different tip potential
Frequently asked questions
Frequently Asked Questions
Do I still pay FICA on tips with the new deduction?
More Tips & Paycheck Calculators
Take-home pay by state
The same salary nets a different amount in every state, because each one writes its own income tax schedule. These state calculators run the 2026 federal brackets and FICA, then apply the state's own rates and standard deduction.