2025 No Tax on Tips Deduction: Eligible Occupations Revealed

On September 2, 2025, the Treasury Department unveiled a list of 68 occupations that qualify for the innovative "no tax on tips" deduction. This deduction is a key component of the "One Big Beautiful Bill Act," which was enacted on July 4, 2025, and applies to federal income taxes from 2025 to 2028. Image 1

The deduction is capped at $25,000 per person annually for qualifying tips and is structured as a "below-the-line" deduction, thus not affecting the computation of adjusted gross income (AGI). It is available to all taxpayers who opt for the standard deduction. Below are the draft occupations eligible under this new tax provision:

Beverage & Food Service:

  • Bartenders
  • Wait staff
  • Food servers, non-restaurant
  • Dining room and cafeteria attendants and bartender helpers
  • Chefs and cooks
  • Food preparation workers
  • Fast Food and Counter Workers
  • Dishwashers
  • Host staff, restaurant, lounge, and coffee shop
  • Bakers

Entertainment and Events:

  • Gambling dealers
  • Gambling change persons and booth cashiers
  • Gambling cage workers
  • Gambling and sports book writers and runners
  • Dancers
  • Musicians and singers
  • Disc jockeys (except radio)
  • Entertainers and performers
  • Digital content creators
  • Ushers, lobby attendants, and ticket takers
  • Locker room, coatroom and dressing room attendants

Hospitality and Guest Services:

  • Baggage porters and bellhops
  • Concierges
  • Hotel, motel and resort desk clerks
  • Maids and housekeeping cleaners

Home Services:

  • Home maintenance and repair workers
  • Home landscaping and groundskeeping workers
  • Home electricians
  • Home plumbers
  • Home heating/air conditioning mechanics and installers
  • Home appliance installers and repairers
  • Home cleaning service workers
  • Locksmiths
  • Roadside assistance workers

Personal Services:

  • Personal care and service workers
  • Private event planners
  • Private event and portrait photographers
  • Private event videographers
  • Event officiants
  • Pet caretakers
  • Tutors
  • Nannies and babysitters

Personal Appearance and Wellness:

  • Skincare specialists
  • Massage therapists
  • Barbers, hairdressers, hairstylists, and cosmetologists
  • Shampooers
  • Manicurists and pedicurists
  • Eyebrow threading and waxing technicians
  • Makeup artists
  • Exercise trainers and group fitness instructors
  • Tattoo artists and piercers
  • Tailors
  • Shoe and leather workers and repairers

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Recreation and Instruction:

  • Golf caddies
  • Self-enrichment teachers
  • Recreational and tour pilots
  • Tour guides and escorts
  • Travel guides
  • Sports and recreation instructors

Transportation and Delivery:

  • Parking and valet attendants
  • Taxi and rideshare drivers and chauffeurs
  • Shuttle drivers
  • Goods delivery people
  • Personal vehicle and equipment cleaners
  • Private and charter bus drivers
  • Water taxi operators and charter boat workers
  • Rickshaw, pedicab, and carriage drivers
  • Home movers

Be sure to understand the eligibility requirements to maximize benefits under this act. To qualify, workers must be employed or classified as independent contractors in tip-receiving roles traditionally recognized before 2025. Tips must be voluntarily given, adequately reported to the IRS, and must appear on either a Form W-2 or Form 1099. Married couples must file jointly to claim this deduction, and a Social Security Number (SSN) must be provided. Image 3

The deduction peaks at a $25,000 ceiling and begins phasing out at a Modified Adjusted Gross Income (MAGI) exceeding $150,000 for single filers and $300,000 for those filing jointly. It’s imperative to note:

  • Tips are still subject to payroll taxes despite the deduction.
  • The provision is temporary, expiring by December 31, 2028.
  • This is a deduction, not an exemption. All tip income must be reported and reduced by the allowed deduction.
  • State tax implications vary based on state laws.

Staying ahead in the tax game means understanding these nuances. Employers and workers should remain abreast of new legislative developments and consult with tax professionals for strategic advice. Contact this office for further inquiries or assistance.Image 2

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