During 2025 through 2028, workers in occupations that customarily receive tips may exclude up to $25,000 in tips from their income for federal income tax purposes.1

That’s a hefty deduction—thanks to the One Big Beautiful Bill Act (OBBBA). But it applies only to qualified tips.

Qualified Tips

The term “qualified tips” refers to cash tips received by an individual in an occupation that customarily and regularly received tips on or before December 31, 2024, as defined by the IRS.2

Thus, the first step in qualifying for the tips deduction is to examine the IRS worker classification list, which you will find in this article. The big question is, “Are you on the list?”

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