No Tax on Tips Calculator for California (2026)
Calculate how much California workers save now that tips are exempt from federal income tax under the OBBBA.
Your Information
Your Annual Tax Savings in California
Tips Tax Exemption in California
Under the One Big Beautiful Bill Act (OBBBA), workers in California who earn tips can deduct 100% of their tip income from federal income tax for tax years 2025 through 2028.
California Minimum Wage for Tipped Workers
The minimum wage in California is $16.50/hour. California does not allow a lower tipped minimum wage — all workers receive the full minimum wage regardless of tip income.
Top Tipped Industries in California
- Restaurant servers
- Bartenders
- Rideshare drivers
- Hair stylists
State Income Tax Applies
California has a state income tax rate of 9.3%. While the OBBBA exempts tips from federal income tax, California may still tax tip income at the state level. Check with a local tax professional for details.
How the No Tax on Tips Law Works
What Qualifies
- Cash tips received directly from customers
- Credit/debit card tips
- Tips from tip pools or tip sharing
- Service charges distributed as tips
What Doesn't Change
- FICA taxes still apply: You still pay 6.2% Social Security + 1.45% Medicare on tip income
- Tips must still be reported: Report all tips to your employer and on your tax return
- Income limit: The exemption applies to workers earning less than $160,000 per year
Federal Calculators
Compare with the federal-level tools: Tip Tax Savings (Federal) | Overtime Tax Savings (Federal)