WASHINGTON (AP) – A preliminary list of occupations has been released by the Trump administration detailing jobs that will not be required to pay federal income tax on tips under the new tax cuts and spending bill. The list includes a wide range of professions such as golf caddies, blackjack dealers, and house painters, but also encompasses more contemporary roles like podcasters and social media influencers.
The provision, signed into law by President Donald Trump in July, eliminates federal income taxes on tips for individuals working in traditionally tipped occupations. This exemption is temporary, lasting from 2025 until 2028, and applies to those earning less than $160,000 in 2025. According to the Yale Budget Lab, approximately 4 million workers in tipped occupations were recorded in 2023, representing about 2.5% of the total workforce.
In compliance with the law, the administration was tasked with publishing a qualifying occupations list within 90 days of its signing. The full list is made available on the Treasury Department's website and is organized into eight categories: beverage and food service; entertainment and events; hospitality and guest services; home services; personal services; personal appearance and wellness; recreation and instruction; and transportation and delivery.
Other notable jobs exempted from the tip tax include sommeliers, cocktail waiters, pastry chefs, bingo workers, club dancers, DJs, clowns, streamers, online video creators, ushers, maids, gardeners, electricians, house cleaners, tow truck drivers, wedding planners, personal care aides, tutors, au pairs, massage therapists, yoga instructors, cobblers, skydiving pilots, ski instructors, parking garage attendants, delivery drivers, and movers.
The Budget Lab's report suggests that the overall impact of this law may be minimal, as many tipped workers typically earn low incomes. In 2022, over 37% of tipped workers earned an income that fell below the federal tax threshold, meaning they owed no federal taxes. However, the report warns that the law may lead to unintended consequences, such as an increase in tipped employment and income, which could raise the overall cost of the bill.
Congressional budget analysts predict that the "No Tax on Tips" provision could add $40 billion to the deficit through 2028. The nonpartisan Joint Committee on Taxation estimated in June that the costs related to the tips deduction might reach $32 billion over the next decade.
Under this new system, only tips that are reported to employers and recorded on a worker's W-2 form will qualify for the exemption. It's also important to note that payroll taxes, which fund Social Security and Medicare, will continue to be collected along with any applicable state and local taxes.
Public reaction to the new tax law has been largely negative. Polling indicates that half of U.S. adults believe the tax law will primarily benefit the wealthy. Approximately six in ten respondents feel it will do more harm than good for low-income individuals.
Fatima Hussein, The Associated Press
