Update Applicable to:	Deadline
All Employers	October 2, 2025

What happened?

On September 1, 2025, the U.S. Department of the Treasury released a preliminary list of 68 occupations eligible for the new “No Tax on Tips” deduction under the One Big Beautiful Bill Act.

The final list will be published in the Federal Register by October 2, 2025, with public comments invited.

Overview:

This provision allows qualifying workers to deduct up to $25,000 in tip and overtime income from their federal taxes between 2025 and 2028, provided their annual income does not exceed $150,000 (or $300,000 for joint filers).

The Treasury grouped eligible jobs into eight categories:

1. Beverage & Food Service – Bartenders, waitstaff, cooks, dishwashers, hosts, etc.

2. Entertainment & Events – Musicians, dancers, gambling workers, digital creators, etc.

3. Hospitality & Guest Services – Bellhops, concierges, hotel clerks, housekeepers.

4. Home Services – Electricians, plumbers, HVAC techs, cleaners, locksmiths.

5. Personal Services – Event planners, tutors, pet caretakers, nannies.

6. Personal Appearance & Wellness – Barbers, massage therapists, fitness instructors.

7. Recreation & Instruction – Tour guides, golf caddies, sports instructors.

8. Transportation & Delivery – Rideshare drivers, valets, movers, water taxi operators.

Additional Information

Highlights for Employers

• Tips must be voluntary, reported, and earned in a listed occupation.
• Employers must track and report tips accurately on W-2 forms.
• The law does not affect tip credit rules under the Fair Labor Standards Act.
• Some jobs not traditionally considered tipped (e.g., plumbers, cooks) are included.
• Employers should update payroll systems, train staff, and adjust onboarding materials.
• Additional guidance will clarify exclusions for certain industries like health care and performing arts.

Source References

• IRS Preliminary Occupation List – OBBBA No Tax on Tips Covered Jobs

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