“No tax on tips” for gig workers: what it covers
Delivery and rideshare drivers may deduct up to $25,000 of tips for 2025–2028. Here's what it does and doesn't cover.
Updated September 28, 2026 · Not tax advice
A new federal deduction lets many tipped workers deduct qualified tips from income tax for tax years 2025 through 2028. It applies to self-employed workers too, including many delivery and rideshare drivers.
Who qualifies
Your work must be on the Treasury’s list of occupations that customarily receive tips. The list includes taxi and rideshare drivers and goods delivery people, which covers most drivers on apps like Uber, Lyft, DoorDash and Amazon Flex.
The tips must be voluntary. Required service charges don’t count. Self-employed workers in certain “specified service” businesses are excluded, but driving and delivery work isn’t in that group.
How much
- Up to $25,000 per return.
- The limit shrinks by $100 for every $1,000 of income above $150,000 ($300,000 for married filing jointly).
- For self-employed workers, the deduction can’t be more than the net profit from the work that earned the tips.
What it doesn’t do
- It doesn’t cut self-employment tax. You still pay 15.3% Social Security and Medicare tax on the profit, tips included.
- It isn’t an exclusion. You still report the tips as income, then take the deduction.
- It doesn’t apply to state tax unless your state adopts it.
You can take it whether you itemize or use the standard deduction.
What it’s worth
For a driver in the 12% bracket, $8,000 of qualified tips saves about $960 of federal income tax. In the 22% bracket, about $1,760.
Our DoorDash, Uber, Instacart and other driver calculators include this deduction. Tick the box and enter your tips.
The rules are new, and how platforms report tips is still settling. Keep your own record of tips from each app’s earnings statements.