Overview

• Draft regulations retain a 68‑occupation list that includes casino roles and digital content creators, with Treasury adopting a broader view than labor law of who customarily receives tips.
• Qualified tips include cash, checks, cards, mobile payments, gift cards, and tokens exchangeable for cash such as casino chips, while meals, event tickets, most digital assets, and illegal‑activity payments do not qualify.
• Automatic service charges and other mandatory amounts are excluded unless customers can modify or decline them, but voluntary tip pools and TRDA/GITCA arrangements are eligible.
• The deduction allows up to $25,000 of qualified tips per year for 2025–2028, applies retroactively to 2025 income, phases out above $150,000 of modified AGI, and is unavailable to married filing separately.
• Only tips reported and reflected on W‑2s (or comparable reporting for self‑employed workers) qualify, and payroll taxes for Social Security and Medicare—as well as state and local taxes—still apply.