Who Qualifies for the New Tip Deduction? Treasury Provides a Tip.

The U.S. Department of Treasury has published a list of occupations that will qualify for the new tip deduction included in the One Big Beautiful Bill Act (OBBBA) passed in July.

This new provision has been touted as “no tax on tips” in both the OBBBA and the media, but that is a misrepresentation. The legislation does not call for a blanket exemption of all tip income from taxation, but rather a deduction against qualified tips.

The deduction, available beginning in 2025, will be limited to $25,000 per tip earner, and will be incrementally reduced for high earners defined as single filers with an adjusted gross income (AGI) exceeding $150,000; $300,000 for married joint filers. If both married spouses earn qualified tips, both are eligible for the deduction as long as they file a joint return. No deduction is allowed for married filing separate taxpayers.  Additionally, this deduction is an above-the-line deduction, meaning you don’t have to itemize deductions to benefit. Taxpayers can take this in conjunction with the standard deduction. This deduction is not permanent. It is set to expire for tax years after December 31, 2028.

The legislation defines qualified tips as cash “received by an individual in an occupation which customarily and regularly received tips before December 31, 2024, as provided by the Secretary.” There was a great deal of speculation on what this meant, and if you attended any presentations, listened to any podcasts, or read any articles, they probably all stated that we were awaiting further guidance from Treasury. And now we have it.

The surprisingly comprehensive and thoughtful list is broken down into eight major categories, each of which provides further detail and includes occupations I would not have considered:

• Food and beverage services
  1. Bartenders
  2. Wait staff
  3. Food servers (including non-restaurant servers)
  4. Dining room and cafeteria attendants (aka bus staff)
  5. Bartender helpers (aka bar backs)
  6. Chefs and cooks
  7. Food preparation workers
  8. Fast food and counter workers
  9. Dishwashers
  10. Host staff
  11. Bakers
• Entertainment and event services
  1. Gambling dealers
  2. Gambling change personnel and booth cashiers
  3. Gambling cage workers
  4. Gambling and sports book writers and runners
  5. Dancers
  6. Musicians and singers
  7. Disc Jockeys (excluding radio)
  8. Entertainers and performers
  9. Digital content creators
  10. Ushers, lobby attendants and ticket takers
  11. Locker room, coat room and dressing room attendants
• Hospitality and guest services
  1. Baggage porters and bellhops
  2. Concierges
  3. Hotel, motel, and resort desk clerks
  4. Maids and housekeeping attendants
• Home services
  1. Home maintenance and repair workers
  2. Home landscaping and groundskeeping workers
  3. Home electricians
  4. Home plumbers
  5. Home heating and air conditioning mechanics and installers
  6. Home appliance installers and repairers
  7. Home cleaning service workers
  8. Locksmiths
  9. Roadside assistance workers
• Personal services
  1. Personal care and service workers
  2. Private event planners
  3. Private event and portrait photographers
  4. Private event videographers
  5. Event Officiants
  6. Pet caretakers
  7. Tutors
  8. Nannies and babysitters
• Personal appearance and wellness services
  1. Skincare specialists
  2. Massage therapists
  3. Barbers
  4. Hairdressers
  5. Hairstylists
  6. Cosmetologists
  7. Shampooers
  8. Manicurists and Pedicurists
  9. Eyebrow threading and waxing technicians
  10. Makeup artists
  11. Exercise trainers and group fitness instructors
  12. Tattoo artists
  13. Piercers
  14. Tailors
  15. Shoe and leather workers and preparers
• Recreation and instruction services
  1. Golf caddies
  2. Self-enrichment teachers
  3. Recreational and tour pilots
  4. Tour guides and escorts
  5. Travel guides
  6. Sports and recreation instructors
• Transportation and delivery services
  1. Parking valets and attendants
  2. Taxi and rideshare drivers and chauffeurs
  3. Shuttle drivers
  4. Good delivery people
  5. Personal vehicle and equipment cleaners
  6. Private and charter bus drivers
  7. Water taxi operators
  8. Charter boat workers
  9. Rickshaw, Pedicab and carriage drivers
  10. Home movers

A few take-aways from this list I’d like to mention. First, this list includes occupations that seemed to be disqualified under the legislation. Specifically, the legislation excludes those in a “specified service trade or business as defined in IRC section 199A(d)(2),” which include mostly professional services like doctors, attorneys, accountants, actuaries, investment advisors, consultants etc., but also includes performing arts. However, this list would seem to contradict that, specifically listing musicians, dancers, and entertainers as qualified occupations.

A second concern we had from the legislation was the requirement that tips be “paid voluntarily without any consequence in the event of non-payment, is not the subject of negotiation, and is determined by the payor.” While treasury’s list did not specifically address this, it did indicate that non-restaurant food servers would be a qualified occupation, which would cover caterers who typically include a tip for their servers in their overall cost. We still are not 100% sure about this treatment, but the inclusion of them in the list is a positive development.

Finally, although comprehensive, no list could ever capture every possible situation. If your specific job title is not listed, if your actual duties are similar to any of those listed, an argument might be made for your tips being considered qualified. Speak to a tax advisor.

You can view the list as published by on the U.S. Department of the Treasury website: ICYMI: Bessent Touts “No Tax on Tips” | U.S. Department of the Treasury.