Eligible self-employed individuals can deduct up to $25,000 of their tips… Only if they receive Form 1099-NEC, 1099-MISC or 1099-K from the payor that includes the tips.
For 2025, the payor needn't separately report the tips on the form, but the qualified tips must be included in the total amount of payments, compensation, or income reported on any of those forms.
Self-employed individuals who do not receive any of these forms cannot take a deduction for tips received.
The write-off can't exceed net income from the business. For nonemployees, tips are deductible only to the extent gross income from the person's business, including tips, exceeds deductions from that business, other than the deduction for qualified tips.
Self-employed individuals use Schedule 1-A to claim the write-off.
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