No Tax on Tips: 68 Occupations Listed in IRS Proposed Regs

The IRS has released proposed regulations, giving businesses needed details about tracking and reporting income based on tips.

The One Big Beatiful Bill Act (OBBBA) had set October 2, 2025, as the deadline for publishing a list of occupations related to the no-tax-on-tips provision of the new law.

Working ahead of schedule, the IRS and Treasury Department issued the proposed regs in the Federal Register on September 22, 2025.

An Eye Toward Year-End

Due to the OBBBA, employers will need to track qualified tips throughout a given tax year and then report the information on Form W-2 or Form 1099-NEC at year-end.

That’s how employees and independent contractors will determine the amount of compensation they’ve earned in qualified tips. Then, when individuals file Form 1040 with the IRS, they’ll be able to claim an income tax deduction for those qualified tips.

After the passage of the new federal law in July 2025, businesses had questions, such as:

• Who’s eligible for the deduction?
• What’s the definition of qualified tips?
• Are automatic service charges tips?

So, whether your workforce includes tipped employees or independent contractors (or both), you’ll be glad to know the proposed regs shed light on those key questions.

Who’s Eligible for the Deduction?

While the OBBBA specified that tips received by workers in certain fields — such as health, performing arts and athletics — won’t be eligigle for the tax deduction, the law called on the Treasury Department to spell out which tipped occupations will be eligibile for the tax deduction.

The list needed to contain  “occupations that customarily and regularly received tips on or before December 31, 2024,” the new law explained.

First, the Treasury Department posted its preliminary list on August 27, 2025, and made it available to the public shortly thereafter.

Now, in the proposed regs, the list carried over with only minor changes. The list provides 68 occupation titles and the corresponding three-digit codes that — based on the early release draft of the 2026 Form W-2 — employers would enter in box 14b, starting with tax year 2026. Note: We’re still waiting for a Form 1099-NEC revision from the IRS.

Here are the latest codes and titles, according to the proposed regs. The information has been broken down into eight categories by the IRS, as follows:

Beverage & Food Service

• 101 Bartenders
• 102 Wait Staff
• 103 Food Servers, Nonrestaurant
• 104 Dining Room and Cafeteria Attendants and Bartender Helpers
• 105 Chefs and Cooks
• 106 Food Preparation Workers
• 107 Fast Food and Counter Workers
• 108 Dishwashers
• 109 Host Staff, Restaurant, Lounge, and Coffee Shop
• 110 Bakers

Entertainment & Events

• 201 Gambling Dealers
• 202 Gambling Change Persons and Booth Cashiers
• 203 Gambling Cage Workers
• 204 Gambling and Sports Book Writers and Runners
• 205 Dancers
• 206 Musicians and Singers
• 207 Disc Jockeys, Except Radio
• 208 Entertainers and Performers
• 209 Digital Content Creators
• 210 Ushers, Lobby Attendants, and Ticket Takers
• 211 Locker Room, Coatroom, and Dressing Room Attendants

Hospitality & Guest Services

• 301 Baggage Porters and Bellhops
• 302 Concierges
• 303 Hotel, Motel, and Resort Desk Clerks
• 304 Maids and Housekeeping Cleaners

Home Services

• 401 Home Maintenance and Repair Workers
• 402 Home Landscaping and Groundskeeping Workers
• 403 Home Electricians
• 404 Home Plumbers
• 405 Home Heating and Air Conditioning Mechanics and Installers
• 406 Home Appliance Installers and Repairers
• 407 Home Cleaning Service Workers
• 408 Locksmiths
• 409 Roadside Assistance Workers

Personal Services

• 501 Personal Care and Service Workers
• 502 Private Event Planners
• 503 Private Event and Portrait Photographers
• 504 Private Event Videographers
• 505 Event Officiants
• 506 Pet Caretakers
• 507 Tutors
• 508 Nannies and Babysitters

Personal Appearance & Wellness

• 601 Skincare Specialists
• 602 Massage Therapists
• 603 Barbers, Hairdressers, Hairstylists, and Cosmetologists
• 604 Shampooers
• 605 Manicurists and Pedicurists
• 606 Makeup Artists
• 607 Exercise Trainers and Group Fitness Instructors
• 608 Tattoo Artists and Piercers
• 609 Tailors
• 610 Shoe and Leather Workers and Repairers
• 611 Eyebrow Threading and Waxing Technicians

Recreation & Instruction

• 701 Golf Caddies
• 702 Self-Enrichment Teachers
• 703 Sports and Recreation Instructors
• 704 Tour Guides
• 705 Travel Guides
• 706 Recreational and Tour Pilots

Transportation & Delivery

• 801 Parking and Valet Attendants
• 802 Taxi and Rideshare Drivers and Chauffeurs
• 803 Shuttle Drivers
• 804 Goods Delivery People
• 805 Personal Vehicle and Equipment Cleaners
• 806 Private and Charter Bus Drivers
• 807 Water Taxi Operators and Charter Boat Workers
• 808 Rickshaw, Pedicab, and Carriage Drivers
• 809 Home Movers

What’s the Definition of Qualified Tips?

The proposed regulations define qualified tips — for the purposes of the deduction for qualified tips that individuals will be able to claim on their personal income tax returns.

According to the IRS, qualified tips must be:

• Paid in cash or a cash equivalent, such as a check, credit card, debit card or gift card (not included are event tickets, meals, services or other assets not exchangeable for a fixed amount in cash, such as most digital assets)
• Received from customers or through a mandatory or voluntary tip-sharing arrangement, such as a tip pool, and
• Paid voluntarily by the customer and not subject to negotiation.

Are Automatic Service Charges Tips?

Given that part of the definition of qualified tips is that they must be voluntary, businesses have the answer to one of their most pressing questions. Indeed, according to the proposed regs, automatic service charges aren’t considered tips.

That means, for example, if a restaurant imposes an automatic 18% service charge for large parties and distributes that amount to waiters, bussers and kitchen staff, the money distributed to the workers wouldn’t be eligible for the personal income tax deduction.

Details from the OBBBA

The maximum deduction amount for qualified tips is $25,000. The deduction phases out for taxpayers with a modified adjusted gross income over $150,000, or $300,000 for joint filers.

The deduction is available for both itemizing and non-itemizing taxpayers.

However, it’s only available from 2025 through 2028.

The IRS has announced that it won’t make eleventh-hour changes to the 2025 Form W-2 or Form 1099 for tax year 2025. That said, businesses that pay employees and independent contractors are awaiting IRS guidance on how to report tip income, as well as overtime compensation, for the current year.