Tipped occupations ยท Beverage and Food Service
Bartender Tips and the 2026 Tips Deduction: Code 101
Bartenders appear on the Treasury list behind the 2026 tips deduction as occupation code 101, in the Beverage and Food Service category of the final regulations (T.D. 10044). A bartender who is an employee sees the year's reported cash tips in Box 12 of the W-2 with code TP and code 101 in Box 14b, and up to $25,000 of those qualified tips per return is deductible on Schedule 1-A for tax years 2025 through 2028. Tips received out of a tip pool count the same as tips handed over directly, and a bottle service charge is not a tip at all under the IRS's own examples.
Last reviewed: November 4, 2026.
The facts, in one table
| Treasury Tipped Occupation Code | 101, Bartenders |
|---|---|
| Category in the final regulations | Beverage and Food Service |
| Related codes in the same category | 104, Dining Room and Cafeteria Attendants and Bartender Helpers, the barback side of the team; 102, Wait Staff; 109, Host Staff, Restaurant, Lounge, and Coffee Shop |
| The deduction | Up to $25,000 of qualified tips per return, for tax years 2025 through 2028, claimed on Schedule 1-A whether or not you itemize |
| Phaseout | The amount after the $25,000 limit is reduced by $100 for each $1,000 of modified adjusted gross income over $150,000, or $300,000 on a joint return, counting whole $1,000 steps only (section 224(b)(2) of the Internal Revenue Code; 26 CFR 1.224-1(b)(2)) |
| Where the figure appears | Box 12 of your W-2, code TP, with code 101 in Box 14b. For 2026 the deduction is generally limited to the amount the employer separately reported |
| Payroll tax | Unchanged. Tips are wages for Social Security and Medicare tax in full; the deduction reduces income tax only |
Read the code the way the site reads the whole list: appearing on the Treasury list is a published fact about an occupation. It is not a decision about any one worker, and the rest of the rules on this page, the reporting rule in particular, decide what a deduction is built from. The full list of 71 codes is on the Treasury Tipped Occupation Codes page.
tip pool money counts the same
How a bartender's tips reach the tax record
Almost all bartending tips reach the tax system through an employer. The reporting duty sits with the employee: if you receive cash tips of $20 or more in a calendar month, you must report the total to your employer by the tenth day of the following month (IRS Topic No. 761). Cash tips, in the IRS definition, cover three things that between them describe a bartender's whole night: tips received directly from customers, charged tips paid by card and distributed to you, and tips from other employees under any tip-sharing arrangement, which is the tip pool case. What you report is what the employer can put in Box 12 code TP, and code TP is the figure the 2026 deduction is generally limited to.
That chain is why a January W-2 can show a smaller code TP figure than the year felt like. Tips that were never reported to the employer are not in it. If you believe payroll had your reports and printed the code wrongly, or left it off, the correction is the employer's, on Form W-2c, and the missing codes page works through that situation in order. Tips you never reported to the employer are a different case: the IRS states that qualified tips you report yourself on Form 4137 can be used to determine the deduction.
What counts as a qualified tip for a bartender
A qualified tip is a voluntary payment, in an amount the customer decides, received in an occupation on the Treasury list. Sorted by the IRS definitions, the cases a bartender actually meets are these:
- Cash left on the bar, and your share of a tip pool or tip-out: cash tips. The IRS definition of cash tips expressly includes tips received from other employees under any tip-sharing arrangement (Topic No. 761), so money that reaches you through the pool is a tip in the same way as money handed to you.
- Tips charged on a card and distributed to you: charged tips are cash tips in the same definition, and belong in the reported total in the same way.
- A bottle service charge: not a tip. The IRS names the bottle service charge, in restaurants and night clubs, as one of its own examples of a service charge in Topic No. 761. A charge the business adds and the customer must pay is non-tip wages when it is paid out to staff, even if the house passes the whole amount through.
- An automatic service charge on a private event, a buyout, or a large party: the same treatment as the bottle service charge. A mandatory amount is wages, not a tip, whatever the check calls it.
- An amount a guest adds freely on top of the bill: the guest's own payment, and a tip, including where the mandatory charges are also present. The two payments are different in kind, and only one of them is a tip.
Connecticut lists bartenders by name
The wage under the tips
The deduction sits on top of the wage, and the wage for tipped work is set by the Fair Labor Standards Act and by your state. One state writes bartenders into its wage table by name, as the callout below the federal table shows.
| Minimum wage the combined pay must reach | $7.25 an hour |
|---|---|
| Lowest cash wage an employer may pay a tipped employee | $2.13 an hour |
| Maximum tip credit | $5.12 an hour |
| Tipped employee, federal definition | A worker in an occupation that customarily and regularly receives more than $30 a month in tips |
The tip credit is a credit toward the minimum wage, not a discount on it: the employer may count up to $5.12 an hour of a tipped employee's tips toward the $7.25, and if cash wages plus tips do not reach the full minimum wage, the employer owes the difference. States set their own floors on top of the federal one, and the full state table, exactly as the U.S. Department of Labor publishes it, follows. Source: U.S. Department of Labor, Wage and Hour Division, "Minimum Wages for Tipped Employees", last revised July 1, 2026, retrieved November 4, 2026.
Connecticut names bartenders in its wage table. In the Department of Labor table below, Connecticut carries a separate row for bartenders who customarily receive tips: a minimum cash wage of $8.23 an hour and a maximum tip credit of $8.71, against a minimum cash wage of $6.38 and a credit of $10.56 for hotel and restaurant workers generally, at a Connecticut minimum wage of $16.94.
States that require the full state minimum wage before tips
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Alaska | $14.00 | |||
| California | $16.90 | |||
| Guam | $9.25 | |||
| Minnesota | $11.41 | |||
| Montana: business with gross annual sales over $110,000 | $10.85 | |||
| Montana: business not covered by the Fair Labor Standards Act, with gross annual sales of $110,000 or less | $4.00 | |||
| Nevada | $12.00 | |||
| Oregon | $15.55 (standard statewide); $16.80 (Portland metro); $14.55 (nonurban counties) | |||
| Washington | $17.13 |
States that require a minimum cash wage above the federal $2.13 an hour
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Arizona | $15.15 | $3.00 | $12.15 | Not specified |
| Arkansas | $11.00 | $8.37 | $2.63 | Not specified |
| Colorado | $15.16 | $3.02 | $12.14 | More than $30 |
| Connecticut: hotel and restaurant workers | $16.94 | $10.56 | $6.38 | Not specified |
| Connecticut: bartenders who customarily receive tips | $16.94 | $8.71 | $8.23 | |
| Delaware | $15.00 | $12.77 | $2.23 | More than $30 |
| District of Columbia | $18.40 | $8.10 | $10.30 | Not specified |
| Florida | $14.00 | $3.02 | $10.98 | More than $30 |
| Hawaii | $16.00 | $1.25 | $14.75 | |
| Idaho | $7.25 | $3.90 | $3.35 | More than $30 |
| Illinois | $15.00 | 40 percent of the applicable minimum wage ($6.00) | $9.00 | Not specified |
| Iowa | $7.25 | 40 percent of the applicable minimum wage ($2.90) | $4.35 | More than $30 |
| Maine | $15.10 | 50 percent of the applicable minimum wage ($7.55) | $7.55 | More than $191 |
| Maryland | $15.00 | $11.37 | $3.63 | More than $30 |
| Massachusetts | $15.00 | $8.25 | $6.75 | More than $20 |
| Michigan | $13.73 | $8.24 | $5.49 | Not specified |
| Missouri | $15.00 | 50 percent of the applicable minimum wage ($7.50) | $7.50 | Not specified |
| New Hampshire | $7.25 | $3.98 | $3.27 | More than $30 |
| New Jersey | $15.92 | $9.87 | $6.05 | More than $30 |
| New Mexico | $12.00 | $9.00 | $3.00 | More than $30 |
| New York | $17.00 (New York City, Long Island and Westchester); $16.00 (remainder of the state) | Varies by region and type of employer | Varies by region and type of employer | Not specified |
| North Dakota | $7.25 | 33 percent of the applicable minimum wage ($2.39) | $4.86 | More than $30 |
| Ohio: employers with annual gross receipts of $405,000 or more | $11.00 | $5.50 | $5.50 | More than $30 |
| Oklahoma | $7.25 | $5.12 | $2.13 | Not specified |
| Pennsylvania | $7.25 | $4.42 | $2.83 | $135 |
| Rhode Island | $16.00 | $12.11 | $3.89 | More than $30 |
| South Dakota | $11.85 | 50 percent of the applicable minimum wage ($5.92) | $5.93 | More than $35 |
| Vermont | $14.42 | 50 percent of the applicable minimum wage ($7.21) | $7.21 | More than $120 |
| Virgin Islands | $10.50 | $6.30 | 40 percent of the applicable minimum wage ($4.20) | Not specified |
| Wisconsin | $7.25 | $4.92 | $2.33 | Not specified |
| West Virginia | $8.75 | 70 percent of the applicable minimum wage ($6.13) | $2.62 | Not specified |
States where the minimum cash wage is the federal $2.13 an hour
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Alabama | $7.25 | $5.12 | $2.13 | More than $30 |
| American Samoa | Special minimum wage rates apply | $2.13 | More than $30 | |
| Georgia | $7.25 | $5.12 | $2.13 | More than $30 |
| Indiana | $7.25 | $5.12 | $2.13 | More than $30 |
| Kansas | $7.25 | $5.12 | $2.13 | Not specified |
| Kentucky | $7.25 | $5.12 | $2.13 | More than $30 |
| Louisiana | $7.25 | $5.12 | $2.13 | More than $30 |
| Mississippi | $7.25 | $5.12 | $2.13 | More than $30 |
| Nebraska | $15.00 | $12.87 | $2.13 | Not specified |
| North Carolina | $7.25 | $5.12 | $2.13 | More than $20 |
| Northern Mariana Islands | $7.25 | $5.12 | $2.13 | More than $30 |
| Puerto Rico | $10.50 | $8.37 | $2.13 | More than $30 |
| South Carolina | $7.25 | $5.12 | $2.13 | More than $30 |
| Tennessee | $7.25 | $5.12 | $2.13 | More than $30 |
| Texas | $7.25 | $5.12 | $2.13 | More than $20 |
| Utah | $7.25 | $5.12 | $2.13 | More than $30 |
| Virginia | $12.77 | $10.64 | $2.13 | More than $30 |
| Wyoming | $7.25 | $5.12 | $2.13 | More than $30 |
- Florida: the figures above are the ones in the July 1, 2026 revision. The Department of Labor's own footnote to this table states that the Florida minimum wage is scheduled to increase by $1.00 every year on September 30 until reaching $15.00 on September 30, 2026.
- Hawaii: the tip credit is permissible only if the combined amount the employee receives from the employer and in tips is at least $7.00 more than the applicable minimum wage.
- Michigan: the Department of Labor's footnote states that the Michigan tipped cash wage is scheduled to increase annually until it reaches 50 percent of the state minimum wage in 2031, and that the Michigan minimum wage is scheduled to increase to $15.00 on January 1, 2027.
- District of Columbia: employers must currently pay a minimum cash wage of at least 56 percent of the standard minimum wage.
- No state minimum wage law: Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no state minimum wage law, and Georgia's law does not apply to tipped employees; employers covered by the Fair Labor Standards Act in those states pay at least the federal minimum wage.
- Not in this table: the Department of Labor notes that some states set subminimum rates for minors or students or a training wage, and some cities and counties set minimum wages higher than the state rate. The Department advises checking with the state labor office for official information.
Estimate the deduction on your own figures
The tips deduction calculator takes your reported tip total and your income, applies the $25,000 limit and the phaseout, and returns an estimated deduction. It asks for nothing but the figures, and the calculation runs in your browser.
If your January W-2 shows no code TP, or a figure your own records do not support, read the missing codes page before you estimate: for 2026 the reported figure is the ceiling, and the only instrument that raises it is a Form W-2c from your employer.
Other tipped occupations on this site
- Server tips deduction, codes 102 and 103
- Rideshare and delivery driver tips, codes 802 and 804
- Barber and stylist tips deduction, code 603
- Casino dealer tips deduction, code 201
- Golf caddie tips deduction, code 701
- Home services tips deduction, codes 401 to 409
- Hotel staff tips deduction, codes 301 to 304
- Valet parking tips deduction, code 801
- All 71 Treasury Tipped Occupation Codes
Questions and answers
I tend bar some nights and serve tables on others. Which occupation code applies?
Both occupations are on the list: 101 for bartenders and 102 for wait staff. The code your employer prints in Box 14b is the employer's reporting, and the deduction itself is figured from the code TP total rather than from the occupation code. If you believe the wrong code was printed for the work the tips came from, that is corrected by the employer on Form W-2c, like any other box.
Do tips from a tip pool count toward the $25,000?
Tips received under a tip-sharing arrangement are cash tips in the IRS definition (Topic No. 761), so they are reported the same way and sit inside the same deduction as tips handed to you directly, subject to the same rules: reported to the employer, voluntary, and earned in a listed occupation.
The bar adds a service charge to large parties and splits it among the staff. Can I deduct my share as tips?
No. A charge the business adds and the customer must pay is a service charge, and service charges are non-tip wages under the IRS rules, not tips. Topic No. 761 gives the large party charge and the bottle service charge as its restaurant and night club examples. The money is still pay, and still taxable; it simply is not a qualified tip, and it does not belong in code TP.
Sources
- Treasury Decision 10044, April 13, 2026. The final regulations carrying the 71 Treasury Tipped Occupation Codes. Federal Register, Vol. 91, No. 70, pages 19026 to 19056; the list is Table 1 to paragraph (h) of 26 CFR 1.224-2.
- IRS, Topic No. 761, Tips: withholding and reporting. Cash tips include tips received directly from customers, tips from other employees under any tip-sharing arrangement, and charged tips; the $20 a month reporting rule; service charges are non-tip wages, with the IRS's own examples. Read in full November 4, 2026.
- IRS, Fact Sheet FS-2026-13, August 6, 2026, and the IRS W-2 frequently asked questions. For 2026 the tips deduction is generally limited to the amount the employer separately reported in code TP, and amounts reported on a substitute Form 4852 cannot be used for it, while qualified tips reported on Form 4137 can. Note on source level: a fact sheet is IRS guidance, not binding legal authority.
- IRS, Instructions for Forms W-2 and W-3, tax year 2026. Final version, posted January 30, 2026. Carries Box 12 code TP and Box 14b.
- U.S. Department of Labor, Wage and Hour Division, "Minimum Wages for Tipped Employees". The state tipped minimum wage table on this page is transcribed from this source in full: document last revised July 1, 2026, retrieved November 4, 2026.
- Public Law 119-21, enacted July 4, 2025. Created this deduction in section 224 of the Internal Revenue Code, including its $25,000 limit and the phaseout in section 224(b)(2).
Last reviewed: November 4, 2026.