WASHINGTON — The IRS has revealed a list of nearly 70 professions that may soon qualify for the much-debated “no tax on tips” deduction. The list is part of guidance being suggested by the agency ahead of the 2026 tax season.
The IRS is seeking feedback on the guidance before it becomes permanent, with all comments on the proposed regulations due by Oct. 22, 2025. The guidance is necessary following the passage of the “One Big Beautiful Bill Act” which was signed into law on July 4.
As part of the bill, workers who regularly receive qualified tips will be able to deduct those tips when filing their taxes. The deductions may not exceed $25,000 in a taxable year. The deductions also phase out for taxpayers with a modified adjusted gross income over $150,000 ($300,000 for joint filers).
The proposed guidance uses the Treasury Tipped Occupation Code to separate eligible tipped workers by their occupation. Each category of worker belongs to a section defined by the three-digit code. Within each section are the various occupations that would qualify for the deduction.
The eight categories are:
100s – Beverage and Food Service
200s – Entertainment and Events
300s – Hospitality and Guest Services
400s – Home Services
500s – Personal Services
600s – Personal Appearance and Wellness
700s – Recreation and Instruction
800s – Transportation and Delivery
The full list of the 68 professions that would qualify for the “no tax on tips” deduction, can be found here. The “no tax on tips” deduction will be available to taxpayers for 2025-2028 tax filings.
The IRS says the proposed regulation defines qualified and non-qualified tips in the following ways:
Qualified tips must be paid in cash or an equivalent medium, such as check, credit card, debit card, gift card, tangible or intangible tokens that are readily exchangeable for a fixed amount in cash, or another form of electronic settlement or mobile payment application (excluding most digital assets) denominated in cash.
Qualified tips must be received from customers or, in the case of an employee, through a mandatory or voluntary tip-sharing arrangement, such as a tip pool.
Qualified tips must be paid voluntarily by the customer and not be subject to negotiation. Qualified tips do not include some service charges. For instance, in the case of a restaurant that imposes an automatic 18% service charge for large parties and distributes that amount to waiters, bussers and kitchen staff; if the charge is added with no option for the customer to disregard or modify it, the amounts distributed to the workers from it are not qualified tips.
Any amount received for illegal activity, prostitution services, or pornographic activity is not a qualified tip.