IRS Home Services (TTOC)

Do locksmiths qualify for the No Tax on Tips deduction?

Locksmiths appear on the IRS Treasury Tipped Occupation Code list under home services. This is a rescue trade — and rescue trades get tipped. The 1 am car lockout in a parking garage, the parent locked out with a toddler inside, the burglary-repair call: relieved customers tip on top of the bill, and those voluntary tips are §224-qualified. The invoice itself — trip fee, labor, hardware — never is.

Short answer

Yes. Locksmiths are on the IRS TTOC list. Voluntary customer tips — typically after emergency lockouts — qualify for the federal No Tax on Tips deduction, up to $25,000 per year. Service-call fees, labor, and hardware charges are business revenue, not tips. Most locksmiths are self-employed, so the SE-income cap applies.

How much could you save?

Typical tip income for locksmiths.

Locksmiths typically report $800-$4,000/year in tips. Emergency-heavy operators (24/7 lockout service) see the most — late-night automotive and residential lockouts are the highest-tip scenario in the trade. Commercial/institutional locksmiths see almost none.

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For locksmiths specifically

What counts as a qualified tip — and what doesn't.

✓ Qualifies

Cash tips after emergency lockout rescues (car, home, business)
Voluntary tips added on card payment
Late-night appreciation tips on top of the invoice
Tips after urgent burglary-repair or lock-change calls

✗ Does not qualify

Trip/service-call fees, labor, or emergency surcharges you bill
Hardware, locks, or key-blank charges
Key-duplication counter revenue
Auto-club or insurance reimbursements for lockout service
Subcontract dispatch fees from lead platforms

A worked example

Sal, a real-world locksmith.

Sal is a self-employed 24/7 locksmith in a metro market, Schedule C, single filer, MAGI $54,000. For the tax year, she logged $3,100 in qualified tips (late-night lockouts drive it). She sits in the 22% federal marginal bracket.

Deduction allowed: Full $3,100 deduction (net SE income supports it)
Estimated savings: About $682 off federal income tax (SE tax still applies)

This is an illustrative example, not a guarantee. Your actual savings depend on your filing status, total income, state, and other deductions.

Questions specific to locksmiths

What other locksmiths ask.

A stranded driver tipped me $40 at 2 am on top of the $120 bill. Qualified?

Yes — the $40 is a voluntary tip in a TTOC-listed role. The $120 is your service revenue. Log the tip before you drive off; 2 am tips are the ones you will not remember in April.

AAA dispatches me and pays a flat rate. The member also tips me. Which counts?

The AAA flat rate is contract revenue — not a tip. The member's voluntary cash tip qualifies. This split — platform pays the fee, human tips on top — is exactly how gig-economy §224 math works everywhere.

I charge a $75 emergency surcharge at night. Since it is for the emergency, is it tip-like?

No. You set it, you bill it, the customer must pay it — that is revenue. Voluntariness is the entire test, and a surcharge fails it.

Lead platforms take 30% of my jobs. Does that affect the deduction?

Platform fees are business expenses that reduce your net Schedule C income — and net SE income is the cap on your §224 deduction. For a profitable operation the cap rarely binds at typical locksmith tip volumes, but track expenses so you know your net.

Related occupations

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Read the full eligibility guide