How to Claim the Tips Deduction on Form 1040 / Schedule 1-A (2026)
The tips deduction goes on the new Schedule 1-A and flows to Form 1040, Line 13b.
Estimate your Schedule 1-A tips deduction
You claim the No Tax on Tips deduction on the new Schedule 1-A (Additional Deductions), which attaches to Form 1040 and flows to Line 13b. Enter your qualified tips (from W-2 Box 12 code TP, or your own records for 2025), apply the $25,000 cap and the income phase-out, and the result reduces your taxable income — whether you take the standard deduction or itemize.
The OBBBA deductions live on a brand-new form: Schedule 1-A, 'Additional Deductions.' It's where the tips, overtime, car-loan, and senior deductions are calculated before flowing to your Form 1040. You can take these above-the-line deductions and still claim the standard deduction.
For 2026, your qualified tips come from W-2 Box 12, code TP. For 2025, employers weren't required to break them out, so you calculate qualified tips from your own tip records.
Step by step
- Find your qualified tips: W-2 Box 12 code TP (2026) or your tip log (2025).
- Confirm your occupation is on the Treasury/IRS tipped list.
- Enter the tips on Schedule 1-A, applying the $25,000 cap.
- Apply the MAGI phase-out if your income is over $150k single / $300k MFJ.
- The allowed deduction flows to Form 1040, Line 13b, reducing taxable income.
What you can and can't stack
Schedule 1-A deductions are above the line, so they work alongside the standard deduction — you don't have to itemize. If you also have qualifying overtime, car-loan interest, or the senior deduction, each is its own line on Schedule 1-A with its own cap.
You can't deduct the same tips twice, and mandatory service charges never count. Keep your records: the IRS can ask you to substantiate reported tips.
Frequently asked questions
Where do I claim the tips deduction on my 1040?
On the new Schedule 1-A (Additional Deductions), which flows to Form 1040, Line 13b. It's an above-the-line deduction, so you can also take the standard deduction.
What line is the tips deduction on?
It's calculated on Schedule 1-A and carried to Form 1040, Line 13b. The exact Schedule 1-A line for tips is in the IRS instructions; verify with the current-year form.
Do I need to itemize to claim it?
No. The tips deduction is above the line, so you claim it whether you take the standard deduction or itemize on Schedule A.
What if my W-2 doesn't show a code TP?
For 2025, employers weren't required to report it, so calculate your qualified tips from your own records. For 2026 onward, it should appear in Box 12, code TP.
IRS sources & verification
Last reviewed July 12, 2026.