Overview

• The occupations span eight sectors from food service and hospitality to home services and transportation, covering roles such as bartenders, DJs, golf caddies, electricians, and rideshare drivers.
• Qualifying workers can deduct up to $25,000 of reported tip income for tax years 2025 through 2028, with the benefit phasing out above $150,000 for single filers and $300,000 for joint filers.
• The change affects federal income tax only, leaving Social Security and Medicare payroll taxes and state or local taxes unchanged.
• Eligibility is limited to jobs that “customarily and regularly received tips” as of Dec. 31, 2024, and officials say they aim to prevent abuse through forthcoming guidance.
• Treasury materials indicate some fields fall outside the scope, including healthcare and athletic roles, and researchers estimate roughly 4 million Americans work in tipped industries.