New Guidance Issued on OBBBA No Tax on Tips Provision

The One Big Beautiful Bill Act (OBBBA) was signed into law by President Trump on July 4, 2025. The administration’s featured legislation includes dozens of tax provisions impacting individuals, families, businesses, estates, international companies, and workers. Several changes addressed expiring provisions from the Tax Cuts and Jobs Act of 2017, passed during President’s first administration. Examples include making 100% bonus depreciation, the Section 199A deduction, business interest deduction, and the standard deduction permanent. It also called for new programs such as the introduction to Trump accounts, above the line charitable deductions, and new deductions for tip and overtime income. The combination of these provisions spells tax savings for many.

Before taxpayers can take advantage of the new provisions, such as the deduction on tip income, additional guidance is needed from the IRS. These details provide specific information on claiming the deduction. Recently, the Department of Treasury released a preliminary list of occupations that received tips on or before December 31, 2024. While only a preliminary list, it provides important insight which workers, such as bartenders, wait staff, chefs, and cooks, are eligible to claim the deduction. To help clients, prospects, and others, WhippleWood CPAs has provided a summary of the key details below.

What is the No Tax on Tips Deduction?

It is a new federal income tax deduction available to employees, and self-employed individuals which permits the deduction of qualified tips. These are voluntary tips received from customers, or in certain cases, through an establishments tip sharing arrangement. The maximum annual deduction amount is $25,000, for self-employed workers the deduction may not exceed net income from the business where the tips were earned. The deduction phases out for taxpayers with adjusted gross income over $150,000 or $300,000 for married filing jointly. It is important to note the deduction is only temporary phasing out in 2028.

Positions Eligible for the Deduction

Eligible individuals are defined by a list of specific positions released by the IRS or Department of Treasury. The preliminary list was recently published and gives detailed information on the positions in different businesses, such as beverage and food service, entertainments and events, hospitality and guest services, home and personal services, and transportation and delivery. Specific positions in each business have been provided and defined.

• Beverage & Food Services – The preliminary list includes bartenders, waitstaff, food servers, chefs and cooks, food preparation workers, fast food and counter workers, dishwashers, bakers, host staff at restaurants, lounges, and coffee shops.
• Hospitality & Guest Services – The list includes baggage porters, bellhops, concierges, hotel and resort desk clerks, and maids and housekeeping cleaners.
• Home Services – This includes home maintenance and repair workers, landscaping, groundskeeping, electricians, plumbers, appliance installers, home cleaning and locksmiths.
• Personal Services – This includes personal service, event planners, event photographers, event officiants, pet caretakers, tutors, nannies and babysitters.
• Personal Appearance & Wellness – The list includes skin specialists, massage therapists, barbers, hairdressers, cosmetologists, shampooers, manicurist, make-up artists, trainers, group fitness instructors, tailors, and shoe workers (repairs).
• Recreation & Instruction – The list includes golf caddies, self-enrichment teachers, recreational pilots, tour guides, travel guides, and sports & recreation instructors.
• Transportation & Delivery – The list includes parking attendants, taxi drivers, chauffeurs, shuttle drivers, personal vehicle cleaners, charter bus drivers, water taxi operators, and home movers.

The OBBBA prohibits individuals working in the fields of health, performing arts and athletics from eligibility for the deduction. For this reason, related positions do not appear in the list.

Contact Us

The recently published list is only a preliminary version and is subject to changes during the public comment period. However, the agency does not expect there to be significant changes. If you’re company employs individuals with these titles, it is essential to become familiar with the employer side reporting requirements. If you have questions about the information outlined above or need assistance with another tax or accounting issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.