Treasury & IRS Guidance on Tipped Occupations (One, Big, Beautiful Bill)

Treasury & IRS Guidance on Tipped Occupations (One, Big, Beautiful Bill)Context:Guidance issued under the “no tax on tips” provision of the One, Big, Beautiful Bill.Proposed regulations identify which occupations customarily receive tips and define what counts as qualified tips eligible for deduction.Nearly 70 occupations are listed, ranging from bartenders to water taxi operators.Occupation Categories (Treasury Tipped Occupation Codes):100s – Food & Beverage Service200s – Entertainment & Events300s – Hospitality & Guest Services400s – Home Services500s – Personal Services600s – Personal Appearance & Wellness700s – Recreation & Instruction800s – Transportation & DeliveryDefinition of Qualified Tips:Must be cash or cash-equivalent, e.g., check, card, gift card, electronic payment (excluding most digital assets).Must be voluntary customer payments, or received via mandatory/voluntary tip pools.Cannot be service charges automatically added to bills (e.g., a restaurant’s 18% charge for large parties).Excludes illegal activity-related payments.Public Input:Comments due by Oct. 23, 2025, submitted via Regulations.gov.Effective Impact:Clarifies which workers can benefit from tip deductions.Narrows definition of qualified tips to ensure compliance and prevent abuse.