---
kind: "section"
citation: "26 U.S.C. § 224"
title: "26"
title_heading: "Internal Revenue Code"
number: "224"
heading: "Qualified tips"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/224"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter B — Computation of Taxable Income"
  - "Part VII — Additional Itemized Deductions for Individuals"
---

# §224. Qualified tips

- (a) **In general—** There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the individual pursuant to section [6041(d)(3)](/usc/26/6041.md?p=d-3), [6041A(e)(3)](/usc/26/6041A.md?p=e-3), [6050W(f)(2)](/usc/26/6050W.md?p=f-2), or [6051(a)(18)](/usc/26/6051.md?p=a-18), or reported by the [taxpayer](/usc/26/1313.md?p=b) on Form 4137 (or successor).
- (b) **Limitation—**
  - (1) **In general—** The amount allowed as a deduction under this section for any taxable year shall not exceed $25,000.
  - (2) **Limitation based on adjusted gross income—**
    - (A) **In general—** The amount allowable as a deduction under [subsection (a)](#a) (after application of [paragraph (1)](#b-1)) shall be reduced (but not below zero) by $100 for each $1,000 by which the [taxpayer](/usc/26/1313.md?p=b)’s modified [adjusted gross income](/usc/26/62.md?p=a) exceeds $150,000 ($300,000 in the case of a [joint return](/usc/26/62.md?p=b-3-D)).
    - (B) **Modified adjusted gross income—** For purposes of this paragraph, the term “modified [adjusted gross income](/usc/26/62.md?p=a)” means the [adjusted gross income](/usc/26/62.md?p=a) of the [taxpayer](/usc/26/1313.md?p=b) for the taxable year increased by any amount excluded from gross income under section [911](/usc/26/911.md), [931](/usc/26/931.md), or 933.
- (c) **Tips received in course of trade or business—** In the case of qualified tips received by an individual during any taxable year in the course of a [trade or business](/usc/26/1402.md?p=c) (other than the [trade or business](/usc/26/1402.md?p=c) of performing services as an [employee](/usc/26/430.md?p=c-7-D-vi)) of such individual, such qualified tips shall be taken into account under [subsection (a)](#a) only to the extent that the gross income for the [taxpayer](/usc/26/1313.md?p=b) from such [trade or business](/usc/26/1402.md?p=c) for such taxable year (including such qualified tips) exceeds the sum of the deductions (other than the deduction allowed under this section) allocable to the [trade or business](/usc/26/1402.md?p=c) in which such qualified tips are received by the individual for such taxable year.
- (d) **Qualified tips—** For purposes of this section—
  - (1) **In general—** The term “qualified tips” means [cash](/usc/26/856.md?p=c-5-K) tips received by an individual in an occupation which customarily and regularly received tips on or before December 31, 2024, as provided by the Secretary.
  - (2) **Exclusions—** Such term shall not include any amount received by an individual unless—
    - (A) such amount is paid voluntarily without any consequence in the event of nonpayment, is not the subject of negotiation, and is determined by the payor,
    - (B) the [trade or business](/usc/26/1402.md?p=c) in the course of which the individual receives such amount is not a specified service [trade or business](/usc/26/1402.md?p=c) (as defined in [section 199A(d)(2)](/usc/26/199A.md?p=d-2)), and
    - (C) such other requirements as may be established by the Secretary in regulations or other guidance are satisfied.

    For purposes of [subparagraph (B)](#d-2-B), in the case of an individual receiving tips in the [trade or business](/usc/26/1402.md?p=c) of performing services as an [employee](/usc/26/430.md?p=c-7-D-vi), such individual shall be treated as receiving tips in the course of a [trade or business](/usc/26/1402.md?p=c) which is a specified service [trade or business](/usc/26/1402.md?p=c) if the [trade or business](/usc/26/1402.md?p=c) of the employer is a specified service [trade or business](/usc/26/1402.md?p=c).

  - (3) **Cash tips—** For purposes of [paragraph (1)](#d-1), the term “[cash](/usc/26/856.md?p=c-5-K) tips” includes tips received from customers that are paid in [cash](/usc/26/856.md?p=c-5-K) or charged and, in the case of an [employee](/usc/26/430.md?p=c-7-D-vi), tips received under any tip-sharing arrangement.
- (e) **Social security number required—**
  - (1) **In general—** No deduction shall be allowed under this section unless the [taxpayer](/usc/26/1313.md?p=b) includes on the return of tax for the taxable year such individual’s social security number.
  - (2) **Social security number defined—** For purposes of [paragraph (1)](#e-1), the term “social security number” shall have the meaning given such term in [section 24(h)(7)](/usc/26/24.md?p=h-7).
- (f) **Married individuals—** If the [taxpayer](/usc/26/1313.md?p=b) is a married individual (within the meaning of [section 7703](/usc/26/7703.md)), this section shall apply only if the [taxpayer](/usc/26/1313.md?p=b) and the [taxpayer](/usc/26/1313.md?p=b)’s spouse file a [joint return](/usc/26/62.md?p=b-3-D) for the taxable year.
- (g) **Regulations—** The Secretary shall prescribe such regulations or other guidance as may be necessary to prevent reclassification of income as qualified tips, including regulations or other guidance to prevent abuse of the deduction allowed by this section.
- (h) **Termination—** No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028.

## Source credit

(Added Pub. L. 119–21, title VII, § 70201(a), July 4, 2025, 139 Stat. 170.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 224 was sucessively renumbered section 225, then 226, of this title by Pub. L. 119–21, title VII, §§ 70201(a), 70202(a), July 4, 2025, 139 Stat. 170, 174.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section applicable to taxable years beginning after Dec. 31, 2024, see section 70201(j) of Pub. L. 119–21, set out as an Effective Date of 2025 Amendment note under section 45B of this title.

### Published List of Occupations Traditionally Receiving Tips

Pub. L. 119–21, title VII, § 70201(h), July 4, 2025, 139 Stat. 173, provided that: “Not later than 90 days after the date of the enactment of this Act [July 4, 2025], the Secretary of the Treasury (or the Secretary’s delegate) shall publish a list of occupations which customarily and regularly received tips on or before December 31, 2024, for purposes of section 224(d)(1) of the Internal Revenue Code of 1986 (as added by subsection (a)).”