The U.S. Treasury Department has formally outlined the extensive scope of the Trump administration’s “no tax on tips” policy, a significant tax relief measure for a broad spectrum of service industry professionals. This initiative, a key component of the One Big Beautiful Bill Act (OBBBA), targets a direct reduction in the tax burden on tipped income, impacting millions across the service economy. The policy stems from a central campaign pledge by President Donald Trump, subsequently incorporated into OBBBA, introducing a substantial deduction of up to $25,000 for qualified tips received by eligible workers. This provision is slated to be active from 2025 through 2028, with its continuation beyond this period contingent upon further congressional action. To implement this policy, the Treasury Department was mandated to identify and list occupations customarily compensated with tipped income prior to OBBBA’s enactment. This exhaustive review process ultimately categorized more than 60 distinct tipped jobs into eight primary industry sectors, clarifying which workers stand to benefit from the new deduction.
- The “no tax on tips” policy is a key initiative from the Trump administration.
- It is formally outlined under the One Big Beautiful Bill Act (OBBBA).
- The policy offers a substantial tax deduction of up to $25,000 for qualified tipped income.
- It aims to provide direct tax relief to millions of service industry professionals.
- The deduction is slated to be active from 2025 through 2028.
- The Treasury Department identified over 60 eligible occupations across eight industry sectors.
Eligible Occupations for Tip Deduction
The Treasury Department’s detailed list covers a wide array of professions across the service sector. While comprehensive, the following highlights represent the breadth of occupations now eligible for the tip income deduction:
- Beverage & Food Service: Bartenders, wait staff, food servers (including those in hotels or residential care facilities), chefs, and host staff at various dining establishments.
- Entertainment & Events: Dancers, musicians, diverse entertainers (e.g., comedians, street performers), digital content creators (e.g., streamers, podcasters), ushers, and gambling industry personnel such as dealers and cage workers.
- Hospitality & Guest Services: Baggage porters, bellhops, concierges, hotel desk clerks, and housekeeping and cleaning staff.
- Home Services: Workers involved in home maintenance and cleaning, landscaping, electricians, plumbers, heating and air conditioning mechanics, locksmiths, and roadside assistance providers.
- Personal Services: Personal care aides, private event planners, photographers and videographers, event officiants, pet caretakers, tutors, and nannies.
- Personal Appearance & Wellness: Skincare specialists, massage therapists, barbers, hairstylists, manicurists, makeup artists, exercise trainers, tattoo artists, and tailors.
- Recreation & Instruction: Golf caddies, various instructors (e.g., art, dance, sports), recreational and tour pilots, and tour and travel guides.
- Transportation & Delivery: Parking and valet attendants, taxi and rideshare drivers, shuttle drivers, goods delivery personnel, charter bus drivers, and home movers.
This policy signifies a notable shift in how tipped income is treated for tax purposes, offering substantial financial relief to a crucial segment of the U.S. workforce. By directly reducing the tax burden on a significant portion of their earnings, the measure aims to enhance the disposable income of service professionals and recognize the unique economic dynamics of tipped employment.
Michael Zhang is a seasoned finance journalist with a background in macroeconomic analysis and stock market reporting. He breaks down economic data into easy-to-understand insights that help you navigate today’s financial landscape.