IRS clarifies tip deduction rules

The IRS and Treasury have finalized rules for the “no tax on tips” provision under the One Big Beautiful Bill Act, defining eligible occupations and what counts as “qualified tips.”

The final list covers more than 70 tip-based roles, grouped under Treasury Tipped Occupation Codes.

Gig workers and self-employed individuals may also qualify if their job appears on the list and other conditions are met.

For self-employed individuals, the law restricts the deduction so that it cannot exceed the person’s net income. Learn more.