In late September, the Treasury Department presented a list of preliminarily-approved occupations that will qualify for the new federal tax-free tip income provision on 2025 tax returns. Here is what you need to know.

One Big Beautiful Bill Act

As part of the One Big Beautiful Bill Act (OBBBA), qualifying tip income will not be subject to federal income tax from 2025 through 2028. The maximum benefit is $25,000. There is an income limit of $150,000 for single filers and $300,000 for joint filers. (This income limit is modified adjusted gross income, including the tips.) There is a reduction of the deduction amount (but not lower than zero) by $100 for each $1,000 in excess of these amounts.

While some occupations were listed in the tax bill, the Treasury Department was tasked with developing specific regulations to determine what exactly qualifies as an acceptable tip occupation. There is now a full list of qualifying activities available for comment before finalizing the rule. You can read that news alert here.

Tax-free tip occupations

Review the list. Review the list to ensure it includes your activity. Here is the list.

Leave a comment. If your occupation is not there, now is the time to comment on the preliminary list and advocate for its inclusion. If others like yourself want the occupation added, it may just get done before the tax rule is finalized. All comments must be received by October 22, 2025.

Keep track now. Remember, the tax year is 3/4 complete. Therefore, now is the time to ensure your employer is capturing your tax-free tip income and is preparing to present the supporting documents.

Treasury Tipped Occupation Code (TTOC). This is a new code that defines accepted occupations for tax-free tips. Since the occupation must customarily receive tips before December 31, 2024, you may find the definition much narrower than found in the Standard Occupational Classifications. So review the definition.

The general areas of occupations are:

• Beverage & Food Service (100s)
• Entertainment & Events (200s)
• Hospitality & Guest Services (300s)
• Home Services (400s)
• Personal Services (500s)
• Personal Appearance & Wellness (600s)
• Recreation & Instruction (700s)
• Transportation & Delivery (800s)

Know your code. You will need to provide an occupation code when claiming this tax-free income. Having an approved occupation and an employer that is familiar with the codes will make filing your taxes more straightforward.

Once the comment period is over, then the Treasury and IRS will publish the final codes for use in preparing your 2025 tax return. Contact our RRBB advisors if you have any questions.