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Ugur Karakoc | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The U.S. Department of the Treasury and IRS on Friday issued proposed regulations with more details about President Donald Trump<\/a>‘s “no tax on tips”<\/a> deduction.<\/p>\n Enacted via Trump’s “big beautiful bill”<\/a> in July, the provision allows certain workers to deduct up to $25,000 in “qualified tips” per year from 2025 through 2028. The tax break on tips phases out, or gets smaller, once modified adjusted gross income exceeds $150,000.<\/p>\n Since the measure applies to current-year earnings, it has sparked questions<\/a> \u2014 including which jobs qualify<\/a> \u2014 from tipped workers and tax professionals.<\/p>\n More from Personal Finance:<\/strong> In 2023, there were roughly 4 million U.S. workers in tipped occupations,\u00a0representing 2.5% of all employment<\/a>, according to estimates from The Budget Lab at Yale University.<\/p>\n Here are some key things to know about the new tax break, according to Treasury officials.<\/p>\n<\/div>\n The Treasury in August released a\u00a0preliminary list of 68 occupations<\/a>\u00a0that “customarily and regularly received tips” as of Dec. 31, 2024, as required by Trump’s legislation.<\/p>\n However, certain jobs, known as so-called “specified service trade or businesses<\/a>,” or SSTBs, don’t qualify, Treasury officials told reporters on Thursday.<\/p>\n SSTBs include categories like health care, legal, financial services, performing arts and more. Trump’s 2017 tax law outlined the list of SSTBs to limit eligibility for a\u00a020% deduction for certain businesses<\/a>.\u00a0<\/p>\n<\/div>\n Treasury officials also confirmed that automatic gratuity won’t count as a qualified tip because the payment isn’t given to workers voluntarily.\u00a0\u00a0\u00a0<\/p>\n For instance, let’s say you work at a restaurant that requires an 18% fixed gratuity for parties of six or more. Such earnings would not qualify for the tax break.<\/p>\n Treasury officials on a press call Thursday said that the new tax break is complicated and said they will provide further guidance when the regulation is finalized.<\/p>\n This is a developing story. Please refresh for updates.<\/strong><\/em><\/p>\n<\/div>\n
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