No Tax on Tips for the Self-Employed & 1099 Workers (2026)
Independent and gig workers get the tips deduction too — here's how it works for 1099 income.
Estimate your tips deduction
Yes — self-employed and 1099 workers in a listed tipped occupation can claim the No Tax on Tips deduction, up to $25,000 for 2026. You report your tips as part of gross receipts on Schedule C, then take the deduction on Schedule 1-A. Important: the deduction lowers income tax only — your tips are still subject to self-employment tax on Schedule SE.
The No Tax on Tips deduction isn't just for W-2 restaurant staff. Independent hairstylists, rideshare and delivery drivers, and other gig workers in listed occupations can claim it too. The mechanics are slightly different because you report income on Schedule C rather than a W-2.
The key nuance for the self-employed: the deduction reduces your income tax, but not your self-employment tax. Your tips are part of your net profit, which still faces the 15.3% SE tax on Schedule SE.
How a 1099 worker claims the deduction
Report all your tips as part of gross receipts on Schedule C — they're business income like the rest of your earnings. Your net profit (after business deductions) flows to Form 1040 and to Schedule SE for self-employment tax. Separately, you claim the qualified-tips deduction on Schedule 1-A, which reduces the income subject to income tax.
Because the deduction doesn't touch SE tax, a self-employed tipped worker still owes the full 15.3% on their profit, including tips. Plan for that with quarterly estimated payments so you're not caught short at filing.
Who this applies to
- Rideshare and delivery drivers (a listed transportation/delivery occupation).
- Independent hairstylists, barbers, and nail technicians renting a booth.
- Self-employed musicians, DJs, and event performers.
- Any 1099 worker whose occupation is on the Treasury/IRS tipped list.
Frequently asked questions
Can self-employed workers get the no-tax-on-tips deduction?
Yes, if your occupation is on the Treasury/IRS list. You report tips on Schedule C and claim the deduction on Schedule 1-A, up to $25,000 for 2026, subject to the income phase-out.
Do 1099 tips still owe self-employment tax?
Yes. The deduction reduces income tax only. Your tips are part of your net profit and remain subject to the 15.3% self-employment tax on Schedule SE.
How do I report tips as a gig worker?
Include them in gross receipts on Schedule C along with your other income. Keep a daily tip log, especially for cash tips, to support the amount.
Do DoorDash or Uber tips qualify?
Delivery and rideshare are listed tipped occupations, so voluntary customer tips generally qualify. Report them on Schedule C and claim the deduction on Schedule 1-A.
IRS sources & verification
Last reviewed July 12, 2026.