About the tips deduction

What the IRS says

On 5 March 2026 the IRS summarized a federal deduction for qualified tips that employees and self-employed people may be able to claim, starting with their 2025 federal tax return. According to that summary:

• “Qualified tips” are voluntary cash or charged tips received from customers, including shared tips, in certain occupations that the IRS lists.
• The maximum annual deduction is $25,000. For self-employed people it can't exceed the net income, before this deduction, from the trade or business where the tips were earned.
• It phases out when modified adjusted gross income is over $150,000, or $300,000 for joint filers. Married people must file jointly.
• A valid Social Security number is required. The deduction is available whether you itemize or take the standard deduction.
• It applies to tax years 2025 through 2028.

Rules like these can change. Check the IRS pages below for the current version, and ask a tax professional about your own situation.

What your Tipstub record shows

The IRS asks people who receive tips to keep a daily record of them; Publication 531 explains how. Tipstub's Year tab shows what you logged, per year and per job: card tips, cash tips (and which of them you marked as reported to your employer), tip-outs, net tips, wages and hours. You can export it as CSV files or a one-page PDF. Whether and how to use these numbers on a tax return is for you, and your tax professional, to decide.

IRS pages

• What the “No Tax on Tips” deduction means for you
• Occupations that customarily and regularly received tips
• Guidance for individuals who received tips or overtime during tax year 2025
• Final regulations listing the occupations that customarily and regularly receive tips
• Publication 531, Reporting Tip Income
• Tip recordkeeping and reporting

Working in Canada?

This is a US federal deduction and doesn't apply to Canadian tax returns. The Canada Revenue Agency explains how tips are reported in Canada.