Form 8846: The Employer Credit for Employee Tips
Published November 5, 2026
Form 8846 is the credit for employer social security and Medicare taxes paid on certain employee tips. It is a business credit. Employers in some tipped businesses can claim it. Employees do not claim it. This page covers tax year 2025. IRS: Form 8846 (2025)
Who should file
The form says to claim the credit only for employer taxes paid in certain businesses where tipping is customary. The general instructions name food or beverage employers. For tax years after 2024, they also name certain beauty service businesses. IRS: Form 8846 (2025), general instructions
You can claim or choose not to claim the credit in any year within 3 years from the due date of your return. You can do this on your original return or on an amended return. IRS: Form 8846 (2025), general instructions
The four steps on the form
- Line 1: Enter the tips your employees received for services on which you paid employer social security and Medicare taxes.
- Line 2: Enter the tips that are not subject to the credit rules. These are tips used to meet the federal minimum wage.
- Line 3: Subtract line 2 from line 1. This is your creditable tips amount.
- Line 4: Multiply line 3 by 7.65%. If a tipped employee's wages, including tips, went over $176,100 in 2025, check the box and follow the instructions.
Line 5 is for credits passed through from partnerships and S corporations. Line 6 is the total. IRS: Form 8846 (2025), lines 1 to 6
How the minimum wage affects the tip amount
The form's own example shows how line 2 works. A food worker reports $450 in tips for October and $375 in wages, at $3.75 an hour. At the $5.15 minimum wage used in the form, the same work would pay $515. The $140 difference reduces the creditable tips, so $310 of the $450 counts for the credit. The instructions say to figure this for each employee on a monthly basis. IRS: Form 8846 (2025), specific instructions for line 2
This is an example from the form, with the form's numbers. Your own numbers will differ.
The deduction you give up
The general instructions say that if you claim this credit, you must reduce your income tax deduction for employer social security and Medicare taxes by the amount on line 4. IRS: Form 8846 (2025), general instructions
Where the credit goes
If you are not a partnership or an S corporation, report the amount from line 6 on Form 3800, Part III, line 4f. Partnerships and S corporations report on Schedule K. If your only source of this credit is a partnership or S corporation, you may report it directly on Form 3800. IRS: Form 8846 (2025), line 6 and Who Should File
Read Form 3800 basics to see how this credit fits with other business credits.
Records to keep
Keep the tip reports and payroll records for each tipped employee, by month. Line 2 depends on the wages each employee was paid, so the monthly figures matter. The form says to figure the non-creditable tips for each employee on a monthly basis. For the difference between tips and service charges, the form points to Revenue Ruling 2012-18. IRS: Form 8846 (2025), general instructions and Revenue Ruling 2012-18 reference
Common mix-ups
- This credit is for the employer's taxes, not the employee's. Employees do not file Form 8846.
- Claiming the credit affects your income tax deduction for employer taxes. You must reduce that deduction by the line 4 amount.
- Partnerships and S corporations have their own reporting path. Check the Who Should File section if you are one of them.
Related reading
Read the no tax on tips and overtime deductions for the employee side of tip rules. Read Form 8919 if you received wages on which the employer did not collect the employee's share of tax.
General information, not advice for your situation.
Sources: Sources: IRS, Form 8846 (2025), Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips (https://www.irs.gov/pub/irs-pdf/f8846.pdf) This is general information, not advice about your specific return.
