- Rytuo
- No tax on tips for massage therapists
No tax on tips for massage therapists: what the deduction really covers.
"No tax on tips" is a federal income tax deduction for qualified tips, for tax years 2025 through 2028, and massage therapists are on the IRS list of occupations that customarily received tips. This guide explains who qualifies, how much can be deducted and what records to keep, using the IRS's own wording.
This guide is general information, not tax advice. It summarizes IRS pages as they read on November 9, 2026; rules and guidance can change, and state income tax rules differ. Talk to a tax professional about your own situation.
What the deduction is
The law signed on July 4, 2025 as Public Law 119-21 (the IRS now calls it the Working Families Tax Cuts; its 2025 guidance refers to it as the One, Big, Beautiful Bill) created a new deduction. In the IRS's words: effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual, or reported directly by the individual on Form 4137.
"Qualified tips" are voluntary cash or charged tips received from customers or through tip sharing. The deduction is figured on Form 1040, Schedule 1-A.
Massage therapists are on the IRS list
The IRS list of occupations that customarily and regularly received tips includes, under "Personal appearance and wellness", Treasury Tipped Occupation Code 602: Massage therapists, described as people who "perform therapeutic massages of soft tissues and joints; may assist in assessment and therapy plans", with examples such as masseuse, deep tissue massage therapist and sports massage therapist. The same category also lists skincare specialists (code 601, with spa esthetician among the examples). See the full IRS list.
Limits and conditions at a glance
| Rule | What the IRS says |
|---|---|
| Years | Tax years 2025 through 2028 |
| Maximum deduction | $25,000 a year |
| Income phase-out | Modified adjusted gross income over $150,000 ($300,000 for joint filers) |
| Self-employed | Deduction may not exceed net income (before this deduction) from the trade or business in which the tips were earned |
| Specified service trades or businesses | Self-employed individuals in an SSTB under section 199A are not eligible; employees whose employer is in an SSTB are not eligible either. Notice 2025-69 gives transition relief for 2025 to workers who receive tips in the course of an SSTB |
| Itemizing | Available to both itemizing and non-itemizing taxpayers |
| Filing | Social Security number on the return; married couples must file jointly |
From the IRS fact sheet and newsroom pages listed under Sources, checked November 9, 2026.
Records to keep
For 2025, IRS guidance (Notice 2025-69) explains how workers can figure the deduction when their Form W-2 or Form 1099 does not show tips separately, because those forms were unchanged for 2025. One of the IRS's examples is a self-employed worker who receives tips through a payment platform whose Form 1099-K does not separate them; because he keeps a daily log of each customer and tip amount, he may use that amount. The practical lesson for a massage therapist: keep a dated record of every tip you receive, by client visit, whether it is paid in cash or by card.
- Employees: the IRS examples use the tips shown on Form W-2, tips reported to the employer and unreported tips declared on Form 4137.
- Self-employed therapists: keep your own tip log and your platform or card statements.
- Studio owners: employers and payors must report tips and the recipient's occupation on information returns, according to the IRS. Ask your payroll provider or accountant how they handle it.
Where Rytuo fits, and where it does not
Rytuo does not record or split tips. What it does: it records every payment for a visit with its payment method, so the day's revenue by cash and card is clear, and it calculates each therapist's pay (per massage, hourly, percentage, base, bonuses and advances) from completed visits. Tips stay in your own records or your payroll system. See massage therapist software, spa software or pricing.
Frequently asked questions
Is there no tax on tips for massage therapists?
There is a federal income tax deduction for qualified tips for 2025 through 2028, and massage therapists are on the IRS list of occupations that customarily and regularly received tips (Treasury Tipped Occupation Code 602, "Massage therapists"). So tips a massage therapist receives can count as qualified tips, if the other conditions are met. It is a deduction, up to $25,000 a year, not a full exemption from every tax.
How much can I deduct?
The IRS says the maximum annual deduction is $25,000. It phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). If you are self-employed, the deduction cannot exceed your net income, before this deduction, from the trade or business in which you earned the tips.
Which years does the tips deduction cover?
Tax years 2025 through 2028, according to the IRS. It was created by the law signed on July 4, 2025 as Public Law 119-21, which the IRS now calls the Working Families Tax Cuts (also known as the One Big Beautiful Bill).
Do I need to itemize to claim it?
No. The IRS says the deduction is available whether you itemize or take the standard deduction. You need a valid Social Security number on the return and, if married, you must file jointly. The deduction is figured on Form 1040, Schedule 1-A.
Does it apply to self-employed massage therapists?
It can: the IRS says both employees and self-employed individuals may deduct qualified tips. But self-employed individuals in a specified service trade or business (SSTB) under section 199A are not eligible, and neither are employees whose employer is in an SSTB; for 2025, Notice 2025-69 gives transition relief to workers who receive tips in the course of an SSTB. Whether your work falls into an SSTB is a question for your tax professional.
Does Rytuo track tips?
No. Rytuo does not record or split tips. It records every payment for a visit with its payment method and calculates therapist pay from completed visits. Keep your own tip records, as the IRS describes, and ask your tax professional how to report them.
Sources
- IRS: Working Families Tax Cuts, tax deductions for working Americans and seniors (No Tax on Tips fact sheet), checked November 9, 2026
- IRS: What the No Tax on Tips deduction means for you, checked November 9, 2026
- IRS: Occupations that customarily and regularly received tips on or before Dec. 31, 2024, checked November 9, 2026
- IRS: Treasury, IRS provide guidance for individuals who received tips or overtime during tax year 2025 (Notice 2025-69), checked November 9, 2026
Information checked on November 9, 2026. Rules and figures change; if something here is out of date, email [email protected] and we will correct it within 7 days.
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