06/02/2026
The new tip-income deduction can help lower a tax bill, but it won’t always do much on its own, especially for certain self-employed workers.
If your federal income tax is already wiped out by the standard deduction, credits, or relatively low income, there may not be any tax left for the deduction to reduce. And even when it does apply, it only affects federal income tax; it does not affect self-employment tax.
It’s still a good deduction opportunity for a lot of people, but it is a little disappointing if you’re expecting a larger refund when you owe no income tax, as it doesn’t reduce your self-employment tax.
*Always check with a professional before making moves as each situation is unique.