Form 8846 Credit for Employer Social Security and Medicare Taxes P

Note: The draft you are looking for begins on the next page.

Caution: DRAFT—NOT FOR FILING

This is an early release draft of an IRS tax form, instructions, or publication,
which the IRS is providing for your information. Do not file draft forms. We
incorporate all significant changes to forms posted with this coversheet.
However, unexpected issues occasionally arise, or legislation is passed—in this
case, we will post a new draft of the form to alert users that changes were made
to the previously posted draft. Thus, there are never any changes to the last
posted draft of a form and the final revision of the form. Forms and instructions
are subject to OMB approval before they can be officially released, so we post
drafts of them until they are approved. Drafts of instructions and pubs usually
have some additional changes before their final release. Early release drafts are
at IRS.gov/DraftForms and remain there after the final release is posted at
IRS.gov/LatestForms. Also see IRS.gov/Forms.
Most forms and publications have a page on IRS.gov: IRS.gov/Form1040 for
Form 1040; IRS.gov/Pub501 for Pub. 501; IRS.gov/W4 for Form W-4; and
IRS.gov/ScheduleA for Schedule A (Form 1040), for example, and similarly for
other forms, pubs, and schedules for Form 1040. When typing in a link, type it
into the address bar of your browser, not a Search box on IRS.gov.
If you wish, you can submit comments to the IRS about draft or final forms,
instructions, or pubs at IRS.gov/FormsComments. Include “NTF” followed by the
form or pub number (for example, “NTF1040”, “NTFW4”, “NTF501”, etc.) in the
body of the message to route your message properly. We cannot respond to all
comments due to the high volume we receive and may not be able to consider
many suggestions until the subsequent revision of the product, but we will
review each “NTF” message. If you have comments on reducing paperwork and
respondent (filer) burden, with respect to draft or final forms, please respond to
the relevant information collection through the Federal Register process; for
more info, click here.

TREASURY/IRS AND OMB USE ONLY DRAFT
Form

8846

Department of the Treasury
Internal Revenue Service

Credit for Employer Social Security and Medicare Taxes
Paid on Certain Employee Tips

OMB No. 1545-0123

2025

Attach to your tax return.
Go to www.irs.gov/Form8846 for the latest information.

Attachment
Sequence No. 846

Identifying number

Name(s) shown on return

Note: Claim this credit only for employer social security and Medicare taxes paid by employers in certain businesses
where tipping is customary. See the instructions for line 1.
Tips received by employees for services on which you paid or incurred employer social
security and Medicare taxes during the tax year (see instructions) . . . . . . . . . .

1

2

Tips not subject to the credit provisions (see instructions) . . . . . . . . . . . . .

2

3

Creditable tips. Subtract line 2 from line 1

3

4

Multiply line 3 by 7.65% (0.0765). If you had any tipped employees whose wages (including
tips) exceeded $176,100, see instructions and check here . . . . . . . . . . .

4

Credit for employer social security and Medicare taxes paid on certain employee tips from
partnerships and S corporations . . . . . . . . . . . . . . . . . . . . . .

5

Add lines 4 and 5. Partnerships and S corporations, report this amount on Schedule K. All
others, report this amount on Form 3800, Part III, line 4f . . . . . . . . . . . . .

6

5
6

For Paperwork Reduction Act Notice, see instructions.

. . . . . . . . . . . . . . . . . .

Cat. No. 16148Z

Form 8846 (2025) Created 10/30/25

DRAFT — DO NOT FILE

DRAFT — DO NOT FILE

1

TREASURY/IRS AND OMB USE ONLY DRAFT
Page 2

Form 8846 (2025)

General Instructions
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments
For the latest information about developments
related to Form 8846 and its instructions,
such as legislation enacted after they were
published, go to www.irs.gov/Form8846.

What’s New
For tax years beginning after 2024, the tax
credit was extended to certain beauty service
businesses. See Who Should File below for
more information on the businesses to which
the credit was extended.
Certain employers (see Who Should File
below) use Form 8846 to claim a credit for
social security and Medicare taxes paid or
incurred by the employer on certain
employees’ tips. The credit is part of the
general business credit.
You can claim or elect not to claim the
credit any time within 3 years from the due
date of your return on either your original
return or on an amended return.
Partnerships and S corporations must file
this form to claim the credit. All other
taxpayers are not required to complete or file
this form if their only source for this credit is a
partnership or S corporation. Instead, they
can report this credit directly on line 4f in Part
III of Form 3800, General Business Credit.
For information regarding taxes imposed on
tips, including information on the difference
between tips and service charges, see
Revenue Ruling 2012-18, 2012-26 I.R.B., at
www.irs.gov/irb/2012-26_IRB#RR-2012-18.

Who Should File
File Form 8846 if you meet the following
conditions.
1. You had employees who received tips
from customers for either or both of the
following.
a. Providing, delivering, or serving food or
beverages for consumption if tipping of
employees for delivering or serving food or
beverages is customary.
b. Providing barbering and hair care, nail
care, esthetics, or body and spa treatment
services, if tipping of employees for providing
such services is customary.
2. During the tax year, you paid or incurred
employer social security and Medicare taxes
on those tips.

How the Credit Is Figured
Generally, the credit equals the amount of
employer social security and Medicare taxes
paid or incurred by the food or beverage
employer or the beauty services employer,
taking into account the following.

Specific Instructions
Figure the current-year credit from your trade
or business on lines 1 through 4.

Line 1
Enter the tips received by employees for
services on which you paid or incurred
employer social security and Medicare taxes
during the tax year.
Food and beverage employers include tips
received from customers for providing,
delivering, or serving food or beverages for
consumption if tipping of employees for
delivering or serving food or beverages is
customary.
Beauty and service employers include tips
received from customers for providing
barbering and hair care, nail care, esthetics,
and body and spa treatments if tipping of
employees providing these beauty services is
customary.

Line 2
Food or beverage employees. If you pay
these tipped employees wages (excluding
tips) equal to or more than $5.15 an hour,
enter zero on line 2.

Beauty service employees. If you pay these
tipped employees wages (excluding tips)
equal to or more than $7.25 an hour, enter
zero on line 2.
Figure the amount of tips included on line 1
that are not creditable for each employee on a
monthly basis. This is the total amount that
would be payable to the employee at $5.15 or
$7.25 an hour reduced by the wages
(excluding tips) actually paid to the employee
during the month. Enter on line 2 the total
amounts figured for all employees.

Line 4
If any tipped employee’s wages and tips
exceeded the 2025 social security tax wage
base of $176,100 subject to the 6.2% rate,
check the box on line 4 and attach a separate
computation showing the amount of tips
subject to only the Medicare tax rate of
1.45%. Subtract these tips from the line 3
tips, and multiply the difference by 0.0765.
Then, multiply the tips subject only to the
Medicare tax by 0.0145. Enter the sum of
these amounts on line 4.
Reduce the income tax deduction for
employer social security and Medicare taxes
by the amount on line 4.
Fiscal-year taxpayers. If you have an
employee with wages and tips paid in 2026
that exceeded the 2026 social security wage
base of $184,500 by the end of the 2025
fiscal year, follow the line 4 instructions above
to determine the amount to enter on that line.
The determination whether the tipped
employee’s wages exceed the social security
wage base is made for each calendar year.
Paperwork Reduction Act Notice. We ask
for the information on this form to carry out
the Internal Revenue laws of the United
States. You are required to give us the
information. We need it to ensure that you are
complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long as
their contents may become material in the
administration of any Internal Revenue law.
Generally, tax returns and return information
are confidential, as required by section 6103.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated burden for
individual and business taxpayers filing this
form is approved under OMB control number
1545-0074 and 1545-0123 and is included in
the estimates shown in the instructions for
their individual and business income tax
return.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler, we
would be happy to hear from you. See the
instructions for the tax return with which this
form is filed.

DRAFT — DO NOT FILE

DRAFT — DO NOT FILE

Purpose of Form

Food or beverage employers. These
employers cannot claim the credit for taxes
on any tips that are used to meet the federal
minimum wage rate in effect on January 1,
2007, of $5.15 an hour. Therefore, the amount
of tips for any month that are used to figure
the credit must be reduced by the amount by
which the wages that would have been
payable during that month at $5.15 an hour
exceed the wages (excluding tips) paid by the
employer during that month.
Beauty service employers. These employers
cannot claim the credit for taxes on any tips
that are used to meet the federal minimum
wage rate currently in effect, of $7.25 an hour.
Therefore, the amount of tips for any month
that are used to figure the credit must be
reduced by the amount by which the wages
that would have been payable during that
month at $7.25 an hour exceed the wages
(excluding tips) paid by the employer during
that month.
Example. A food or beverage employee
worked 100 hours and received $450 in tips
for October 2025. The worker received $375
in wages (excluding tips) at the rate of $3.75
an hour. If the employee had been paid $5.15
an hour, the employee would have received
wages, excluding tips, of $515. For credit
purposes, the $450 in tips is reduced by $140
(the difference between $515 and $375), and
only $310 of the employee’s tips for October
2025 is taken into account.
Additional Medicare Tax. A 0.9% Additional
Medicare Tax applies to Medicare wages and
tips. However, Additional Medicare Tax is only
imposed on the employee. There is no
employer share of Additional Medicare Tax.
Thus, there is no effect on the credit for
employer social security and Medicare taxes
on certain employee tips.