The Tip Jar Revolution: IRS Unveils Preliminary Tipped Jobs List for ‘No Tax on Tips’ Deduction

September 5, 2025

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) are rolling out guidance on the new “No Tax on Tips” provision under the One Big Beautiful Bill Act (OBBB Act), ushering in a significant change for tax collection for employers with employees who receive tips.

On September 2, 2025, the Treasury Department and the IRS issued a “preliminary list” of tipped occupations clarifying which employees will be entitled to claim tax deductions for tips and unveiled a draft Form W-2 with boxes for tipped wages eligible for the deduction.

Quick Hits

·         The IRS has released a “preliminary list” of occupations that “customarily and regularly” receive tips that are eligible for the new tax deduction for tipped wages introduced by the OBBB Act.

·         The “No Tax on Tips” provision under the OBBB Act allows eligible employees to deduct qualified tips from their taxable income, with a cap of $25,000 per year from 2025 to 2028.

·         A preliminary list of sixty-eight tipped occupations includes unexpected roles such as dishwashers and plumbers, with a final list expected by October 2, 2025.

·         The IRS has further unveiled a new draft Form W-2 that implements the changes introduced by the OBBB Act.

OBBB Act ‘No Tax on Tips’

Under the “No Tax on Tips Provision,” effective 2025 through 2028, employees and self-employed workers may deduct qualified tips received while working in occupations that customarily and regularly receive tips as specified by the IRS. “Qualified tips” are defined as voluntary cash or charged tips paid by customers or received through tip sharing.

Eligible tipped employees, including those who itemize and do not itemize their taxes, can claim a tax deduction up to $25,000 per year. Employers with tipped employees must file information returns with the IRS or Social Security Administration (SSA) and provide statements to employees showing their cash tips received and occupation.

Tipped Occupations

The “preliminary list” sets forth “occupations that customarily and regularly received tips on or before December 31, 2024” and provides codes for tax reporting purposes. The OBBB Act requires the Treasury Department to publish the final list by October 2, 2025. However, while the “preliminary list” is not final, the Treasury Department and IRS said they “anticipate that the official proposed list will be substantially the same as this preliminary list.”

Significantly, the list includes some occupations, such as dishwashers, cooks, plumbers, and electricians, that are not typically considered as jobs that “customarily and regularly” receive tips by the U.S. Department of Labor (DOL) for purposes of the Fair Labor Standards Act (FLSA).

The preliminary list identifies sixty-eight distinct occupation codes under eight industry categories.

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