Updated October 17, 2026. Quick answer: Box 7 of Form W-2 shows the tips you reported to your employer. The employer instructions say the total of boxes 3 and 7 should not be more than $176,100 for 2025, that all tips are also reported in box 1, and that tips in box 7 are included in box 5. Box 7 does not hold allocated tips, which go in box 8.
More IRS forms and schedules for individual filers, read line by line: Form 4137 instructions.
Schedule 2 (Form 1040) for 2025, read line by line: Schedule 2 lines 5 to 7 and Schedule 2 lines 13 to 16.
What box 7 reports
The employer instructions say: “Show the tips that the employee reported to you even if you did not have enough employee funds to collect the social security tax for the tips.” For the employee, the key words are “reported to you”. Box 7 is built from the tips you told your employer about, which is why the amount may differ from what you actually received in tips. Tips the employer allocated to you are in a different box, covered on the box 8 page.
This page is the box 7 explainer. The other boxes on the form are laid out in the W-2 boxes 1 to 8 guide.
How box 7 sits next to box 3 and the wage base
Box 3 is defined as wages “not including social security tips and allocated tips”, so tips in box 7 are not counted again in box 3. The two boxes then share one ceiling: “The total of boxes 3 and 7 should not be more than $176,100 (the maximum social security wage base for 2025).” The wage base for a later year is tracked on the social security wage base page.
As an illustration, not an IRS example: if box 3 shows $170,000 and box 7 shows $5,000, the total is $170,000 + $5,000 = $175,000 and that is under $176,100. If box 3 were $174,000 and box 7 were $5,000, the total would be $179,000 and the instructions say the total should not be more than the wage base. The box 3 side is described on the box 3 page.
In practice a worker with tips should look at three numbers together: the wages in box 3, the tips in box 7 and the tax in box 4. Reading one alone can mislead, because the instructions treat box 3 and box 7 as two parts of one social security measure. The tax side is on the box 4 page.
Box 7 and boxes 1 and 5
The employer instructions spell out where reported tips go: “Report all tips in box 1 along with wages and other compensation.” “Also include any tips reported in box 7 in box 5.” So the tips you reported are inside the number in box 1 and inside the number in box 5, and they are shown separately in box 7 so that social security tax can be tied to them.
This is the reason box 7 should not be added to box 1. The box 1 definition lists among its components the “tips reported by the employee to the employer (not allocated tips)”. The comparison of how the same pay shows in each wage box is on the box 1 vs box 3 vs box 5 comparison, and the box 1 and box 5 definitions are on the box 1 page and the box 5 page.
Tips that were not collected, and tips on other forms
Sometimes the employer could not collect the tax on your tips from your regular pay. The box 12 instruction for code A reads “Uncollected social security or RRTA tax on tips.” “Include this tax on Form 1040 or 1040-SR.” The box 4 tax and its limit are on the box 4 page, and the box 12 codes are listed on the box 12 codes page.
Tips can also show up outside a W-2. Cash tips reported on payer forms are covered on the 1099-NEC cash tips page and the 1099-K cash tips page. Those pages are about different forms, so read them for comparison and not as instructions for box 7.
Edition and box numbers
The primary read for this page is the 2025 edition of Form W-2, the Wage and Tax Statement an employee receives in early 2026 for tax year 2025. That includes the Notice to Employee and the Instructions for Employee printed on the copies, together with the 2025 General Instructions for Forms W-2 and W-3. The form itself is headed “Wage and Tax Statement 2025”. The 2026 edition was the one irs.gov served as current on 2026-10-17, and it was read side by side for comparison. The wording of box 7 is the same in both editions apart from the figure. The 2026 instructions read “The total of boxes 3 and 7 should not be more than $184,500 (the maximum social security wage base for 2026).” The sentence about reporting all tips in box 1 and including box 7 tips in box 5 is repeated unchanged: “Also include any tips reported in box 7 in box 5.” Check the tax year printed on the form you received, because the box numbers on this page are the ones on the 2025 and 2026 forms and your copy may be a different year.
Common mistakes
- Adding box 7 on top of box 1. The instructions say “Report all tips in box 1 along with wages and other compensation.”
- Comparing box 3 alone with the wage base. The ceiling in the instructions applies to “The total of boxes 3 and 7”.
- Mixing up reported and allocated tips. Box 3 is “not including social security tips and allocated tips”, and allocated tips have their own box.
Related: the social security wage base, cash tips on Form 1099-NEC, cash tips on Form 1099-K, and the box 12 codes.
Sources
- General Instructions for Forms W-2 and W-3 (2025): IRS archived PDF (irs.gov)
- Form W-2, Wage and Tax Statement (2025), with the Notice to Employee and Instructions for Employee: IRS archived PDF (irs.gov)
- General Instructions for Forms W-2 and W-3 (2026): https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
- Form W-2, Wage and Tax Statement (2026), with the Notice to Employee and Instructions for Employee: https://www.irs.gov/pub/irs-pdf/fw2.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.