What the Preliminary List of Occupations for the “No Tax on Tips” Rule Means for Your Small Business
In our previous post, “High-Level Overview of the New Federal Bill,” we covered the major points of the One Big Beautiful Bill Act (OBBBA). In that article, we made clear that despite headlines like “no tax on tips” or “overtime exceptions,” there are no new tax cuts per se — the law mostly extends the existing tax tables. We also explained that the “no tax on tips” provision doesn’t change employers’ payroll withholding: it’s a deduction the employee takes on their individual tax return, and only applies in occupations that “customarily and regularly received tips” as of December 31, 2024.
What’s New: Treasury Releases Preliminary List of Eligible Occupations
Since then, the Treasury Department has issued a preliminary list of tipped occupations that may qualify under the “no tax on tips” regulation. This list is part of implementing the OBBBA, and while it’s not yet final, it gives a much clearer picture of who might be eligible. Treasury expects the final proposed regulations to include almost the same occupations, and is asking for public comment.
Some details to note:
To qualify, an occupation must have customarily and regularly received tips on or before December 31, 2024.
There are carve-outs: tips received in certain trades or businesses — for example, in health, performing arts, or athletics — might not qualify. Guidance is still forthcoming.
The IRS and Treasury will publish the final list and regulations in the Federal Register. Employers should monitor those updates.
Which Occupations Are on the Preliminary List?
The Treasury’s preliminary list highlights a wide range of jobs across hospitality, entertainment, personal services, and more. While this is not the complete list, here are the categories most relevant to employers:
Food & Beverage Service: This is the largest group, covering front- and back-of-house roles. It includes wait staff, bartenders, baristas, counter workers, and hosts, as well as support staff like bussers, dishwashers, cooks, and bakers. In practice, this means restaurants, cafes, and catering businesses will be the most directly impacted.
Entertainment & Events: Occupations in this group include performers such as musicians, dancers, DJs, and other entertainers, along with support staff like ushers, ticket takers, and coatroom attendants. The list also covers gambling-related roles such as dealers, booth cashiers, and cage workers.
Hospitality & Guest Services: Tipped positions in hotels and resorts make up another significant group. These include baggage porters, bellhops, concierges, desk clerks, and housekeeping staff — all positions where tipping has long been customary.
Home Services & Maintenance: This category extends beyond traditional hospitality and encompasses a range of professionals, including landscapers, electricians, plumbers, HVAC technicians, appliance repair technicians, and house cleaners. While not every job in these fields typically receives tips, Treasury’s list acknowledges that tipping in home service settings has become increasingly common.
Personal Services & Appearance / Wellness: This group includes barbers, hairdressers, cosmetologists, skincare specialists, massage therapists, manicurists and pedicurists, and makeup artists. It also covers tattoo and piercing artists, reflecting the broad spectrum of personal service providers who often rely on tips.
Recreation, Instruction & Tours: Roles here include golf caddies, tour guides, travel guides, recreational instructors (sports, fitness, and self-enrichment such as art or dance teachers), and even certain charter or private pilots. These occupations show how tipping extends beyond hospitality into recreation and tourism.
Transportation & Delivery: The section encompasses a diverse range of transportation jobs. These range from traditional roles, such as taxi drivers, chauffeurs, shuttle drivers, and valet attendants, to newer occupations, including rideshare drivers and delivery workers. It also includes more niche positions like water-taxi operators, rickshaw or pedicab drivers, carriage drivers, and home movers.
For the complete, detailed list of all 68 occupations, employers should review the Treasury’s official release.
What This Means for Employers
For employers, the preliminary list is an early indicator of which industries and roles may be directly impacted once the “no tax on tips” provision takes effect. It’s important to remember that this does not change your payroll process right now — you must continue withholding payroll taxes on all tips until the IRS issues final guidance.
What the list does provide is clarity on where to expect changes in the future. If you employ workers in these occupations, you may need to prepare for employee questions about how tips will be handled on their personal tax returns. You’ll also want to monitor IRS updates closely, as the final regulations could adjust which jobs are included and spell out additional details such as carve-outs, thresholds, or record-keeping requirements.
In short, this is a heads-up rather than a call to action. Keep your current payroll practices in place, stay informed, and be ready to communicate clearly with your employees as the rules develop.
The Treasury’s preliminary list offers more clarity than we had before — it shows 68 occupations spanning eight industries that may qualify for the no-tax-on-tips deduction under OBBBA. But it’s not final. For now, there are no changes to what employers withhold, and much still depends on how the final regulation is written and implemented.
At PayWorks Payroll, we’ll keep tracking these updates so we can help you interpret and apply them accurately once everything is settled.
PayWorks is not providing legal or tax advice. The information on this website is for informational purposes only and should not be relied upon as legal or tax advice. You should consult with your own legal and tax advisors before making any decisions about your financial situation.