Final “No Tax on Tips” Regulations Issued

On April 10, 2026, the U.S. Department of the Treasury and the IRS released final regulations implementing the “No Tax on Tips” provision of the One, Big, Beautiful Bill. The rules define what qualifies as a deductible tip and identify eligible occupations.

The final regulations organize occupations using the Treasury Tipped Occupation Code system, assigning each role a three‑digit code and description. As proposed, occupations are grouped into eight categories:

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

The finalized list expands eligible roles to include visual artists and floral designers within Personal Services and adds gas pump attendants to the Transportation and Delivery category.

Qualified tips must be voluntary payments made by customers in cash or cash equivalents, including checks, cards, gift cards, or electronic and mobile payments and must be properly reported on tax forms such as a W‑2 or 1099. Tips received directly from customers or through tip‑sharing arrangements, such as tip pools, may qualify. Mandatory service charges generally do not qualify unless the customer can choose to modify or decline the charge. For instance, in the case of a restaurant that imposes an automatic 18% service charge for large parties, if the charge is added with no option for the customer to disregard or modify, the amounts distributed to the workers from this service charge are not qualified tips.

According to the IRS, eligible workers are already receiving refunds under the new provision for the year-ended 2025.

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Source: irs.gov