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New Tax Deduction for Tipped Workers Launches in 2026

2/24/2026

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Summary

Story summary

A new federal tax deduction for tipped workers takes effect for the 2026 tax season, allowing up to $25,000 in tips to reduce federal taxable income.
Tips must be voluntary and cannot include mandatory service charges; the deduction covers workers in food service, personal care, and recreation.
The deduction phases out for single filers over $400,000 and joint filers over $550,000; experts urge seeking help due to complexity.

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Story summary

A new federal tax deduction for tipped workers takes effect for the 2026 tax season, allowing up to $25,000 in tips to reduce federal taxable income.
Tips must be voluntary and cannot include mandatory service charges; the deduction covers workers in food service, personal care, and recreation.
The deduction phases out for single filers over $400,000 and joint filers over $550,000; experts urge seeking help due to complexity.