Are locksmiths tips tax deductible in 2026?
Yes — locksmiths are on the IRS tipped occupation list (code 408). Tips in this job are deductible for 2026, up to $25,000, if the customer chose the amount and could have declined.
Treasury Tipped Occupation Code 408 · Home services · official title: Locksmiths
How tipping works in this job
Lockout calls are the tipping event: someone locked out of a house at night, or out of a car with a child inside, is grateful in cash. Counter work cutting keys is essentially never tipped. Because so much locksmith work is emergency work billed at a premium, customers often assume the premium was the thank-you.
The regulations say: Repair and open locks, make keys, change locks and safe combinations, and install and repair safes. Examples given: Safe installer, key maker.
The thing most likely to disqualify your tips
Nearly all of a lockout call is priced, not tipped — the call-out, the after-hours uplift and the drilling charge are all invoice items. And note the code sits under home services, so commercial and institutional lock work is outside it.
Check your own numbers
Pre-filled for locksmiths. Runs entirely in your browser — nothing is uploaded.
Step 1 — your occupation
Checking for Locksmiths (Treasury code 408). This occupation is on the list.
Step 2 — is it actually a tip?
Answer for the money you are asking about. If some of your income is tips and some is service charges, run them separately.
Step 3 — your tips and income
The phase-out runs on modified AGI, which for most people is the same as AGI.
3 questions left to answer.
OBBBA Deductions · obbbadeductions.com
Tips deduction worksheet — tax year 2026
The three tests, as answered
- Does the customer decide the amount? not answered
- Can the customer decline to pay it? not answered
- Is it a mandatory service charge or auto-gratuity? not answered
Answer the 3 remaining questions above for a result.
Watch out for this in your job: Nearly all of a lockout call is priced, not tipped — the call-out, the after-hours uplift and the drilling charge are all invoice items. And note the code sits under home services, so commercial and institutional lock work is outside it.
Educational estimate only, not tax advice. It runs entirely in your browser and nothing you type is sent anywhere. The deduction is scheduled to expire after tax year 2028.
How this applies to locksmiths
The lockout is this trade’s tipping event and very nearly its only one. Someone shut out of their house at midnight, or standing beside a car with a toddler and the keys both inside it, is not in a frame of mind to quibble about money — they are relieved, and relief converts to cash. Everything else a locksmith does generates none. Cutting keys at a counter, rekeying a cylinder on a scheduled visit, fitting a new deadbolt in the afternoon: none of these are tipped, anywhere, by anyone.
That concentration creates a specific problem, because lockout work is also the most heavily priced work in the trade. A night callout carries a premium, drilling carries a charge, and the total on an emergency invoice is often startling to the customer. Many then reason that they have been generous enough already, which is why lockout tipping is far less universal than the emotional intensity of the moment would suggest. When it does come, it comes as cash on top of an already large bill, and only that cash is deductible.
The placement of this code under home services rather than under a security or trades heading tells you what Treasury had in mind: a locksmith attending a residence. Commercial master-key systems, institutional access control, safe work for businesses and lock hardware supplied to contractors are all a different activity, and none of it produces qualifying tips in the way a householder standing on their own doorstep does.
Safe installation and combination work sits inside the code and is worth noting separately, because it is scheduled, high-value and almost never tipped — the customer treats it as they would any other fitted installation. If a large share of your revenue comes from safes rather than from lockouts, your qualifying tips will be a very small fraction of your income.
The three tests, whatever your job
Paid voluntarily
The customer sets the amount and can decline to pay it.
Paid in cash or a cash equivalent
Card payments and mobile payments count.
Received directly or through a tip pool
Both routes qualify.
Questions
- Are locksmiths on the IRS tipped occupation list?
- Yes. Locksmiths is Treasury Tipped Occupation Code 408, in the home services category. The regulations describe it as: Repair and open locks, make keys, change locks and safe combinations, and install and repair safes.
- What is the most common reason locksmiths lose the deduction?
- Nearly all of a lockout call is priced, not tipped — the call-out, the after-hours uplift and the drilling charge are all invoice items. And note the code sits under home services, so commercial and institutional lock work is outside it.
- How much of my tips can I deduct?
- Up to $25,000 per return, whatever your filing status. The cap applies first, then the amount is reduced by $100 for every $1,000 of modified adjusted gross income above the threshold for your filing status.
- Does a mandatory service charge count as a tip?
- No. A mandatory service charge or automatic gratuity is not a qualifying tip, and the final regulations confirmed this explicitly. It does not qualify even when the customer cannot decline it — a qualifying tip has to be an amount the customer chose to give.
Related occupations in home services
- 409
Roadside assistance workers
You help drivers whose vehicles have broken down — towing, jump starts, tyre changes, fuel delivery.
- 401
Home maintenance and repair workers
You repair and maintain homes and their contents — general handywork, roofing, painting, flooring, or restoring furniture and instruments.
- 402
Landscapers and groundskeepers
You maintain or landscape the grounds of homes — mowing, planting, trimming, irrigation.
Occupation data transcribed from T.D. 10044 — final regulations on occupations that customarily and regularly received tips, Treas. Reg. § 1.224-1(h) table 1, last verified 2026-09-08. Read the regulations.