No Tax on Tips

A deduction is allowed for an amount equal to qualified tip income received during the taxable year that are included on statements furnished to the taxpayer. The allowed deduction for any taxable year cannot exceed $25,000. The allowable deduction is reduced if Modified Adjusted Gross Income (MAGI) exceeds $150,000 ($300,000 if married filing jointly).

If married, taxpayers must file joint return to claim the deduction. Qualified tips means cash tips received by an individual in occupations where tips are customary. The deduction is allowed to non-itemizers. No deduction is allowed if the taxpayer does not include a valid Social Security number on the tax return.