Tim’s Tax News on the Tenth – September 2025

Last month, we briefly discussed the One Big Beautiful Bill Act (“OBBBA”) and a few of its major features. One of those features mentioned was the “no tax on tips” provision. We received some inquiries on how it will be implemented, so without further ado, a little more detail on the 2025 “no tax on tips.” The U.S. Treasury Department issued a preliminary list of nearly 70 jobs that qualify (the list is at the bottom of this article) for “no tax on tips.” The occupations include a wide range of services spanning from Rickshaw drivers to digital content creators.
 
Employees and self-employed people may deduct qualified tips received in eligible jobs that “customarily and regularly receive tips,” effective for 2025 through 2028. Qualified tips are voluntary cash or charged tips received from customers, or through tip sharing. The annual deduction is capped at $25,000. For self-employed people, the deduction may not exceed an individual’s net income. The deduction phases out for taxpayers with modified adjusted gross income over $150,000, or $300,000 for joint filers.
 
The Congressional Budget Office projects the act will increase federal government deficits by $3.4 trillion over 10 years. Its cost will be partially offset by changes to Medicaid, the Supplemental Nutrition Assistance Program, and student loan programs.

The Yale Budget Lab estimated that there were about 4 million workers in tipped jobs in 2023, or about 2.5% of all U.S. employment, so the direct effect of the law on the workforce will likely be small. Tipped workers tend to be lower income.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 31 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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JOBS ELIGIBLE UNDER THE ‘NO TAX ON TIPS’ PROVISION

Beverage and food service

Bartenders

Wait staff

Food servers, non-restaurant

Dining room and cafeteria attendants and 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 sportsbook writers and runners

Dancers

Musicians and singers

Disc jockeys, except radio

Entertainers and performers

Digital content creators

Ushers, lobby attendants, ticket takers

Locker room, coatroom, and dressing room attendants

Hospitality and guest services

Baggage porters and bellhops

Concierges

Hotel, motel, and resort desk clerks

Maids and housekeeping staff

Home services

Home maintenance, repair workers
Home landscaping and groundskeeping workers

Home electricians

Home plumbers

Home heating and air conditioning mechanics and installers

Home appliance installers and repairers

Home cleaning service workers

Locksmiths

Roadside assistance workers

Personal appearance and wellness

Skincare specialists

Massage therapists

Barbers, hairdressers, hairstylists, and cosmetologists

Manicurists and pedicurists

Shampooers
Eyebrow threading and waxing technicians

Makeup artists

Exercise trainers and group fitness instructors

Tattoo artists and piercers

Tailors

Shoe and leather workers, repairers

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

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