68 Jobs Get Tax-Free Tips: Here’s Who Benefits
Photo by Sam Dan Truong on Unsplash
A leaked Treasury list reveals 68 professions that may soon qualify for tax exemptions on tips—
a significant break for service workers starting in 2025.
Who’s on the list:
Food & Beverage Service: Bartenders, waitstaff, cooks, dishwashers, host staff, and bakers.
Entertainment & Events: Dealers, gamblers, musicians, dancers, DJs, digital creators, and ushers.
Hospitality: Bellhops, concierges, desk clerks, and housekeepers.
Home Services: Electricians, landscapers, plumbers, and repair workers.
Personal Services: Photographers/videographers, event planners, tutors, babysitters, and pet sitters.
Wellness & Appearance: Hairstylists, massage therapists, makeup artists, fitness instructors, and tattoo artists.
Recreation & Instruction: Caddies, tour guides, pilots, and instructors.
Transportation & Delivery: Taxi/ride-share drivers, valet, delivery workers, movers, and boat operators.
The Tax Break:
Effective for tax years 2025–2028, individuals in these roles can deduct qualified tip income received in listed occupations.
Qualified tips include voluntary cash or charged tips reported via W‑2, 1099, or Form 4137.
Maximum deduction: $25,000 per year; self‑employed cannot deduct more than their net income from that business.
Phase‑out kicks in at modified AGI above $150,000 (or $300,000 for joint filers).
Upcoming IRS Action:
By October 2, 2025, the IRS must officially publish the occupation list, defining which roles are “customarily and regularly” tipped as of December 31, 2024.
Why This Matters:
These new deductions could mean significant savings for millions of service professionals.
However, practical hurdles remain: IRS needs to finalize definitions, clarify reporting requirements, and integrate this into tax software and guidance.
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See Michael Cohn’s Accounting Today’s article for more information.