No tax on tips for personal care and service workers
Yes, personal care and service workers qualify. The occupation is on the Treasury list of jobs that customarily received tips before 2025 (Tipped Occupation Code 501, personal services). Qualified tips you earn in 2026 can be deducted, up to $25,000, on Schedule 1-A.
What counts as a tip for personal care and service workers
Gratuities a client adds on top of your agreed fee count. If you are self-employed (common for photographers, tutors and planners), keep records of tips separately from fees, and remember the deduction cannot exceed your net profit.
How much could you save?
Federal income tax saved in 2026 for a single filer with $30,000 of other wages.
| Tips in 2026 | Tax saved | Deduction |
|---|---|---|
| $5,000 | $600 | $5,000 |
| $10,000 | $1,200 | $10,000 |
| $15,000 | $1,800 | $15,000 |
| $25,000 | $3,000 | $25,000 |
How to claim it
- Report every tip to your employer so it is included on your Form W-2, or file Form 4137 for unreported tips. If you are self-employed, make sure tips appear on your 1099 or business records.
- Enter your qualified tips and the occupation code 501 on Schedule 1-A, Part II.
- Carry the deduction to Form 1040. You can claim it with the standard deduction.
Other personal services jobs on the list
Frequently asked questions
Do personal care and service workers qualify for the no tax on tips deduction?
Yes. Personal care and service workers are on the Treasury list of occupations that customarily and regularly received tips on or before December 31, 2024 (code 501), so qualified tips earned from 2025 through 2028 can be deducted, up to $25,000 a year.
How much tax would personal care and service workers save on $10,000 of tips?
About $1,200 in federal income tax for a single filer with $30,000 of other wages in 2026. Social Security and Medicare tax still apply to tips.
Do I need to be an employee to qualify?
No. Both employees and self-employed workers in a listed occupation can claim it. Self-employed workers cannot deduct more than the net profit from the business where the tips were earned.