Trump's $25,000 ‘no tax on tips' may cover 68 jobs: Here's how it works and who qualifies

The US Department of the Treasury has released a preliminary list of 68 occupations that may qualify for President Donald Trump's $25,000 "no tax on tips" deduction. This tax relief is part of a provision enacted through Trump's recently passed tax-and-spending legislation, known as the "big beautiful bill."Under the new law, eligible workers may deduct up to $25,000 annually in qualified tip income from their federal taxable income. The deduction will be available from 2025 through 2028. The preliminary list was issued prior to the October 2 occupation list deadline, which was set in the bill. According to the Treasury, the official proposed list will be published in the Federal Register for public comment, though no timeline for that has been provided.Eligibility depends on tip-based work prior to 2025As stated by the Treasury, to qualify for the deduction, workers must be in occupations that "customarily and regularly received tips" on or before December 31, 2024. Tips are defined as voluntary payments made by customers either in cash or by credit card, and also include shared tips through pooling arrangements.The deduction can be claimed even by those who do not itemise their deductions. However, tip income remains subject to payroll taxes, including those for Medicare and Social Security. Ben Henry-Moreland, a certified financial planner with Kitces.com, told CNBC that despite the federal deduction, "you're still likely paying state taxes" on tip earnings.68 jobs identified across multiple industriesThe Treasury's preliminary list of potentially eligible occupations spans food service, entertainment, hospitality, personal services, home services, recreation, and transportation. These are roles in which tipping is common practice. The following tables group the listed occupations by category for clarity:Food service, entertainment, and hospitalityPersonal services, home services, and wellnessRecreation, transport, and deliveryIncome limits apply to the tip deductionThe tax benefit begins to phase out once a worker's modified adjusted gross income exceeds $150,000. Those earning above this threshold will see a reduced deduction or may become ineligible.As reported by CNBC, workers do not need to itemise their deductions to claim the $25,000 relief. The deduction applies to qualified tips only, meaning amounts willingly paid by a customer and not mandated by employers.Experts say guidance is still neededThe release of the preliminary list comes amid ongoing uncertainty about eligibility criteria. Larry Gray, a certified public accountant and government liaison with the National Association of Tax Professionals, told CNBC in July that "some specific guidance" from the Treasury is essential. As quoted by CNBC, Gray stated, "If they don't, then we're going to create a lot of chaos."The Treasury has indicated that the official list is expected to be "substantially the same" as the preliminary version, but public comment may influence any final adjustments. Until then, the current list provides the most comprehensive overview of which occupations may benefit from the deduction.The deduction is part of a broader effort under Trump's administration to revise tax policy affecting workers in industries where tip income is common.