In August, the U.S. Treasury released a draft list of 68 occupations that could qualify for President Donald Trump’s new “no tax on tips” deduction. The policy, enacted in July 2024 through the GOP’s tax bill, allows eligible workers to deduct up to $25,000 in tips per year from 2025 to 2028. The benefit begins to phase out once income exceeds $150,000.
However, tax experts warn that not every job on Treasury’s list will ultimately qualify. “A lot of people will be surprised to find out that not every single occupation on the list is going to actually be eligible,” said Ben Henry-Moreland, CFP at Kitces.com.
Why? The law requires that jobs must not only be in occupations that “customarily and regularly receive tips” before December 31, 2024, but also must avoid being classified as a Specified Service Trade or Business (SSTB). SSTBs include sectors like health care, finance, law, and performing arts — categories already restricted in earlier tax legislation.
This creates tricky scenarios. For example:
An esthetician at a salon may qualify, but one working in a dermatology office (a health care SSTB) may not.
A casino lounge singer employed by the venue could qualify, but a self-employed lounge singer (considered performing arts) would be excluded.
With the official occupation list due October 2, experts say further guidance is essential to clarify who can, and who cannot, claim the deduction.
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Source: Ana Teresa Sola, Kate Dore, CNBC
