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New Tip Deduction Occupations Announced

On September 2, 2025, the Treasury Department unveiled an anticipated draft list of 68 occupations now eligible for the "no tax on tips" deduction. This opportunity is part of the transformative "One Big Beautiful Bill Act," enacted on July 4, 2025, offering pivotal tax relief on federal income taxes for the 2025–2028 tax years. 

The innovation of this deduction allows eligible individuals to claim up to $25,000 annually in qualifying tips as a “below-the-line” deduction. This is accessible to those opting for the standard deduction without affecting their adjusted gross income (AGI). 

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Highlighted below are the broad categories and detailed roles included in the Treasury's draft list:

Beverage & Food Service

  • Bartenders
  • Wait staff
  • Food servers, non-restaurant
  • Dining room and cafeteria attendants, 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 
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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 

The requirements for this deduction under the OBBB provide temporary tax reductions to qualified tipped workers over three years. This relies on several criteria, notably occupations receiving tips customarily and regularly before 2025. The draft list of qualifying occupations is essential. Moreover, tips must be voluntary, properly reported, and with a SSN included on tax returns, alongside other conditions described. 

Deduction Limitations: The deduction maxes at $25,000 yearly and phases out for higher earners.

  • Maximum deduction: Annual max is $25,000. 
  • Income phase-out: Deduction diminishes progressively for modified adjusted gross income (MAGI) above these amounts:
    • Single filers: Begins phasing out over $150,000 MAGI.
    • Married filing jointly: Begins phasing out over $300,000 MAGI. 

Additional Considerations:

  • Excludes payroll taxes: Exclude tips only from federal taxation but include in Social Security and Medicare calculations, or self-employment tax. 
  • Temporary measure: This deduction phases out after December 31, 2028.  
  • Not tax-free: It's a deduced amount from total income, not exempted revenue. 
  • State-specific rules: State-level impact varies based on local regulations. 

To utilize this unprecedented tax benefit, understanding how specific occupations qualify for deductions is paramount for employees and employers alike. Staying informed about evolving tax legislation and professional guidance will ensure compliance while optimizing tax strategies. For further inquiries or assistance, please contact our office.

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