The U.S. Department of the Treasury and Internal Revenue Service on Friday released further guidance for taxpayers who may benefit from the “no tax on tips” provision enacted via President Donald Trump’s “big beautiful bill,” which was signed into law in July.
Despite the name of the provision, tipped earnings may still be taxed in some capacity. The deduction only applies to federal income tax, so workers’ tips will still be subject to payroll taxes like those that fund Social Security and Medicare. They also could owe state income tax on earnings.
Additionally, the law, which applies for tax years 2025 through 2028, only allows workers who receive tips to deduct up to $25,000 in “qualified tips.” The deduction phases out for individual filers earning more than $150,000 a year and married couples making above $300,000 a year.
An estimated 6 million taxpayers report tipped wages, according to the IRS.
The final regulation the IRS released Friday names over 70 occupations that may receive tips which may qualify for the deduction, as well as a clarified definition of qualifying tips. Qualifying occupations fall into one of eight categories, the agency says:
