The working families tax cut is making good on one of Trump’s pivotal promises: No taxes on tips. This promise won over many people in the working class, since there are more and more people who rely on tips as part of their total compensation. Tips are also part of what makes contract or gig work a viable option for many people, such as event planners, musicians, repair workers, and more.
The working families tax cut provided that occupations that have customarily received tips before December 2024 will now be able to deduct tip income up to $25,000 from their taxable income. One limitation is that tips received in specified trades or businesses—such as health, law, accounting, and other fields where the principal asset is the reputation or skill of its employees—do not qualify for this deduction.
Recently, the U.S. Treasury Department released a list of occupations that regularly and customarily received tips before December 31, 2024. This preliminary list is expected to be substantially the same as the official list that will be released in October by the IRS.
Beverage & food service
This is the group most people would think of as tipped workers. Food and beverage industries include bartenders, hosts and restaurant staff, baristas, and food preparation staff.
Entertainment & events
Event and entertainment venues rely on tipped workers such as ushers, ticket takers, and attendants. This industry also includes musicians, performers, and gambling workers. Because an event takes many hands to come together, this industry also includes digital content creators.
Hospitality & guest services
Hotels and resorts rely on tipped workers for guest services, so occupations such as hotel desk clerks, housekeeping, and concierges qualify for the tax deduction.
Home Services
Home services such as repairmen, landscapers, electricians, plumbers, and heating and cooling repairmen will qualify, as well as roadside repairmen and locksmiths.
Personal services
Personal care and service workers depend on tips, and being able to deduct tips from taxable income greatly helps flexible workers such as nannies, tutors, and private event planners and photographers.
Personal appearance & wellness
Hairdressers, makeup artists, massage therapists, and tattoo artists qualify, as well as others who provide personal care services.
Recreation & instruction
Tour guides, sports instructors, and pilots, as well as golf caddies and instructors, will also be able to use the tax deduction.
Transportation & delivery
Finally, delivery drivers, movers, shuttle and rideshare drivers, and private bus and boat drivers will qualify. This adds another layer of flexibility to those workers who have picked up second jobs as Uber drivers or DoorDashers to supplement their primary job.
Bottom Line
No taxes on tips for these occupations allows for more flexibility for people in these industries. Lower taxes for people who may be struggling in the current economy give up to $1,800 a year back to the working American. Although this deduction is set to end in 2028, it will depend on Congressmen and regulators to continue this measure.