On September 2, 2025, draft guidance was circulated by the Treasury, which includes a preliminary list of occupations eligible for the new tax law’s tax deduction for tips received. Under P.L. 119-21, certain individual taxpayers will not have to pay tax on tips, up to $25,000 annually, for tax years including 2025 through 2028.
Employers and contractors will need to report the tips received by each worker in addition to the occupation in which the tips were earned. Each occupation, for which tip recipients will be eligible to claim a tip deduction from income tax for tips received, has a corresponding code that must be reported on an employee’s Form W-2 or an independent contractor’s Form 1099-NEC, along with the amount of the tips received by the individual.
Any businesses that employ workers who received tips in the following industries need to accumulate the total tips received by each worker, so that the completion of the Form W-2 or Form 1099-NEC for 2025 can be prepared accurately and timely. Since more guidance is needed, the compiled information may require modification. However, accumulating the information now will make reporting in the next few months much easier.
Although further guidance on tip reporting, such as a clear definition of what constitutes a tip, has not yet been released, the preliminary list below outlines the occupations grouped by industry that are currently included for a tax deduction on tips.
Food and Beverage Services Eligible
- Bartenders
- Wait Staff
- Food Servers, Non-restaurants
- Dining Room and Cafeteria Attendants and Bartender Helpers
- Chefs and Cooks
- Food Preparation Workers
- Fast Food and Counter Workers
- Dishwashers
- Host Staff, Restaurants, Lounges and Coffee Shops
- Bakers
Entertainment and Events Eligible
- Entertainment and Events
- Gambling Dealers
- Gambling Change Persons and Booth Cashiers
- Gambling Cage Workers
- Gambling and Sports Book Writers and Runners
- Dancers
- Musicians and Singers
- Disc Jockeys (Except Radio)
- Entertainers and Performers
- Digital Content Creators
- Ushers, Lobby Attendants and Ticket Takers
- Locker Room, Coatroom and Dressing Room Attendants
Hospitality and Guest Services Eligible
- Baggage Porters and Bellhops
- Concierges
- Hotel, Motel and Resort Desk Clerks
- Maids and Housekeeping Cleaners
Home Services Eligible
- Home Maintenance and Repair Workers
- Home Landscaping and Groundskeeping Workers
- Home Electricians
- Home Plumbers
- Home Heating/Air Conditioning Mechanics and Installers
- Home Appliance Installers and Repairers
- Home Cleaning Service Workers
- Locksmiths
- Roadside Assistance Workers
Personal Services Eligible
- Personal Care and Service Workers
- Private Event Planners
- Private Event and Portrait Photographers
- Private Event Videographers
- Event Officiants
- Pet Caretakers
- Tutors
- Nannies and Babysitters
Personal Appearance and Wellness Services Eligible
- Skincare Specialists
- Massage Therapists
- Barbers, Hairdressers, Hairstylists and Cosmetologists
- Shampooers
- Manicurists and Pedicurists
- Eyebrow Threading and Waxing Technicians
- Makeup Artists
- Exercise Trainers and Group Fitness Instructors
- Tattoo Artists and Piercers
- Tailors
- Shoe and Leather Workers and Repairers
Recreation and Instruction Services Eligible
- Golf Caddies
- Self-enrichment Teachers
- Recreational and Tour Pilots
- Tour Guides and Escorts
- Travel Guides
- Sports and Recreation Instructors
Transportation and Delivery Services Eligible
- Parking and Valet Attendants
- Taxi and Rideshare Drivers and Chauffeurs
- Shuttle Drivers
- Goods Delivery People
- Personal Vehicle and Equipment Cleaners
- Private and Charter Bus Drivers
- Water Taxi Operators and Charter Boat Workers
- Rickshaw, Pedicab and Carriage Drivers
- Home Movers
Your Guide Forward
To learn more about tax guidance or how the final reconciliation bill could impact your business or individual tax situation, reach out to a knowledgeable Cherry Bekaert tax advisor today.
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