No Items in Cart 
Last week, the United States Department of the Treasury (Treasury) released a preliminary list of occupations that may be entitled to claim the new “no tax on tips” deduction. Specifically, this deduction is included within the recently signed One Big Beautiful Bill Act (Act). The Act, among other things, established these new above-the-line tax deductions. In addition to any new laws within the Act that affect employers and employees, businesses must also comply with any similar regulations established by the U.S. Department of Labor (DOL). Basically, wage regulations are governed by the Fair Labor Standards Act (FLSA). The FLSA is one of the most essential labor laws that affects most workplaces. Failure to comply with any labor or employment laws can result in substantial fines and penalties. In January 2024, in conjunction with the Internal Revenue Service (IRS), the Treasury released information regarding digital asset transactions for employers.
Overview of the “No Tax on Tips” Regulations
Chiefly, as mentioned, the Act provides an above-the-line tax deduction for “qualified tips.” Specifically, to qualify for the deduction, the tips must (among other conditions) be received by an individual engaged in an occupation that “customarily and regularly received tips” on or before December 31st, 2024. Eventually, under the Act, the Treasury must publish an official list of qualifying occupations by October 2nd, 2025. The preliminary list discussed earlier in this blog post can be edited and resubmitted by the deadline specified.
Jobs that Fall Under the “No Tax on Tips” Regulations
According to Littler, the Treasury’s preliminary list includes 68 occupations spread across eight industries. To clarify, the following is the list of industries included:
- Beverage & Food Service
- Entertainment & Events
- Hospitality & Guest Services
- Home Services
- Personal Services
- Personal Appearance & Wellness
- Recreation & Instruction
- Transportation & Delivery
To view the entire list of occupations, divided up by industries, affected and interested employers should examine the Treasury’s preliminary list.
Potential Issues with the “No Tax on Tips” Regulations Occupation List
Furthermore, as reported by Littler, the Treasury’s preliminary list includes many occupations that the DOL has previously found not to “customarily and regularly receive tips.” For instance, the DOL does not believe that cooks and dishwashers fall under that category, while the Treasury list includes those occupations. It’s for reasons like that that the DOL created the “tip credit” obligation under the FLSA. The two occupations mentioned are examples of several jobs that seem to be interpreted differently between the two government agencies. As of the publication date of this blog post, there is no guidance on whether the Treasury or the DOL will realign specific professions in the future.
Employer Takeaways
In conclusion, the Treasury stated in their initial announcement that the official list of professions will be published on or before October 2nd, 2025. Markedly, that list will be released on the Federal Register with a request for public comments. Any businesses that hire tipped workers should stay informed about the updates expected to be released within the next month, as their employees may be eligible to participate in the “no tax on tips” deduction.
