The One Big Beautiful Bill Act (OBBBA) establishes a brand-new tax deduction for tips. But the “no tax on tips” moniker the OBBBA gives to this new law is a bit of an exaggeration.

The deduction is temporary and limited in scope. Many tips will continue to be taxed.

Who Can Claim the Deduction?

For 2025 through 2028, the tips deduction may be claimed by employees and self-employed individuals who work in occupations that customarily and regularly received tips before 2025.1

The IRS is charged with defining who customarily gets tips, and it has produced a preliminary list of such occupations—see Does the IRS List You as Qualifying for the Tips Deduction?

Per the IRS list, customarily tipped occupations include roles in:

Restaurants. Waitstaff, bartenders, hosts, food runners, and counter personnel. In states that permit it, back-of-house workers like cooks or dishwashers who participate in ... Log in to view full article.