The Working Families Tax Cut package is giving women some of the largest tax cuts through tax deductions for tipped income in certain occupations. Also known as the One Big, Beautiful Bill, the Working Families Tax Cut requires the U.S. Treasury and the IRS to maintain a list of occupations that customarily and regularly receive tips in order to find which occupations qualify for the tax deduction. I have discussed these occupations in a previous post, but I want to dive into who is working these jobs. 

The Treasury Department outlined nearly 70 occupations that regularly receive tips, from bartenders and waitstaff to hairstylists and home repairmen. The Bureau of Labor Statistics maintains occupational data and provides statistics on the sex of workers in occupations. Some of these occupations do not have enough data for the BLS to provide such detailed statistics, but around 31 of the occupations for which the BLS does have data match the occupations given by the Treasury Department. This is what we found about the tipped occupations.

  • Out of the 31 jobs we could match, women make up more than 50% of the employment in 18 of the occupations. 
  • Women dominate the restaurant and service industry, making up 54% of bartenders, 58% of food preparation workers, 67% of wait staff, and 82% of hosts in restaurants, lounges, and coffee shops. 
  • Women also dominate the personal care industry, with 85% of manicurists and pedicurists, 91% of hairdressers and cosmetologists, and 95% of skin care specialists. 

If an industry depends on customer service, women seem to dominate the field. Because women are so prominent in the tipped occupations, worker freedom must not only stop at tax-free tips. 

Many of these jobs attract people because they are more flexible than an office job or a traditional nine-to-five. However, many are subject to occupational licensing, which can become a large cost and a prohibitive barrier to entry for many people. Jobs in the personal care or beauty industry require licensing that can differ from state to state or even city to city, and some occupational licenses require extensive training beyond work experience. Women in business bear a disproportionate cost of licensing requirements. Allowing a tax break on tipped income may also give some relief in order to afford licensing fees.

Beyond licensing requirements, these jobs are also less likely to carry benefits such as health insurance and retirement plans for their tipped employees. Offering a tax deduction for tipped income allows more income to be used for acquiring benefits personally or contributing to a private retirement plan. 

Bottom Line

Women dominate in service-oriented occupations, and offering a tax break on tips from these jobs can put them in a better situation to have flexible work and a lighter financial load.