Nichols Accounting Service LLC

What to know about the new ”No Tax on Tips” deduction:

➡️ “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.

➡️ Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.

➡️ Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

➡️ It is not an itemized deduction. You can take the deduction whether you itemize or take the standard deduction.

See comments for a list of qualifying occupations.