Do My Tips Qualify for the Tax Deduction? A Complete Guide to Eligible Occupations

The No Tax on Tips law is one of the biggest tax breaks for working people in years. But not every tip — and not every tipped worker — qualifies for the deduction. Understanding the rules before you file can save you time, avoid mistakes, and make sure you claim every dollar you're owed.

Here's a complete guide.

What Makes a Tip "Qualified"?

For a tip to qualify for the deduction, two things must be true:

You work in a qualified tipped occupation — the Treasury Department maintains an official list of job codes (TTOCs) that qualify.
The tip itself is voluntary — the customer chose to leave it. Mandatory charges imposed by the business don't count.

Let's break down both.

Qualified Tipped Occupations (TTOC Codes)

The Treasury Department published a list of 68+ occupations that customarily receive tips. These are organized by job codes called Treasury Tipped Occupation Codes (TTOCs). If your job is on this list, your tips are eligible for the deduction.

Food & Beverage

This is the largest category, and it's the one most people think of first.

Servers / Waitstaff
Bartenders
Baristas
Bussers
Food Runners
Hosts / Hostesses
Sommeliers
Barbacks
Cocktail Servers
Banquet Servers

If you work in a restaurant, bar, cafe, catering company, or banquet hall and receive voluntary tips, you almost certainly qualify.

Personal Care

The beauty and wellness industry is well-represented.

Hair Stylists
Barbers
Nail Technicians
Spa Therapists
Massage Therapists (non-medical settings)
Estheticians
Makeup Artists
Shampoo Assistants

The key here is "non-medical." If you're a licensed massage therapist working in a medical practice and tips aren't customary, you may not qualify. But salon and spa workers? You're in.

Hospitality

Hotel and resort workers are a big part of the tipped workforce.

Bellhops
Doorpersons
Concierges
Housekeepers
Room Service Attendants
Pool Attendants
Ski Lodge Attendants
Resort Activity Staff

Transportation

Drivers who receive tips are covered.

Rideshare Drivers (Uber, Lyft)
Taxi Drivers
Limo / Car Service Drivers
Shuttle Drivers
Airport Skycaps
Valet / Parking Attendants

This is notable because rideshare drivers are typically independent contractors, not employees. The deduction still applies — it works on both W-2 and 1099 income.

Entertainment & Recreation

DJs
Musicians (live performance)
Tour Guides
Fishing / Hunting Guides
Golf Caddies
Coat Check Attendants
Casino Dealers
Sports Venue Attendants

Delivery

Food Delivery Drivers (DoorDash, Uber Eats, etc.)
Grocery Delivery Drivers (Instacart, etc.)

Other

Tattoo Artists
Pet Groomers
Movers (when tipped)
Florists
Furniture Delivery (when tipped)

Not sure if your specific job qualifies? Check instantly with our eligibility checker →

Excluded Occupations

The law specifically excludes workers in certain professions, even if they occasionally receive tips. These are called Specified Service Trades or Businesses (SSTBs), and they include:

Lawyers
Accountants
Doctors / Physicians
Financial Advisors
Consultants
Actuaries
Brokers

Why are these excluded? Congress wanted the deduction to target traditional tipped workers — people in service occupations where tips are a significant portion of their income. Professionals in SSTBs may occasionally receive gifts or bonuses that look like tips, but their industries are fundamentally different.

If you work in one of these fields, the deduction does not apply to you, regardless of how much you receive in tips.

Types of Tips That Qualify

Even if your occupation is on the list, not every payment counts. Here's the breakdown:

Qualified Tips (YES, these count)

Cash tips handed directly to you by a customer
Credit card tips added to a receipt
Debit card tips processed through payment terminals
Tips from tip-sharing or tip-pooling arrangements — if the original tips were voluntary and the pool distributes them among qualified workers, they count
Digital tips through apps or QR codes, as long as they're voluntary

Non-Qualified Tips (NO, these do NOT count)

Auto-gratuities — the mandatory 18% or 20% added to large party bills, banquet contracts, or delivery orders. Even if the customer "agrees" to pay it, the IRS considers it a service charge because the customer didn't choose the amount.
Mandatory service charges — any charge automatically added by the business, even if it's labeled a "gratuity" on the receipt.
Administrative fees labeled as tips — some businesses add fees that they keep or distribute. These are not voluntary tips.

The distinction is simple: Did the customer voluntarily decide to leave this money for the worker? If yes, it's a qualified tip. If the business imposed the charge, it's not.

Edge Cases

What if I work two tipped jobs?

Great news — you can combine tips from all qualifying occupations. If you bartend three nights a week and drive for Uber on weekends, both sets of tips count. They all roll up to one deduction on your Schedule 1-A.

However, the $25,000 cap is per person, not per job. Combined tips from all jobs are capped at $25,000.

What if only one of my jobs is tipped?

Only the tips from the qualifying occupation count. If you work as a server (qualifying) and also have a desk job (non-tipped), only the server tips go on Schedule 1-A. Your desk job wages are just regular income.

What about tips at a side gig?

If the side gig is a qualified tipped occupation and you receive voluntary tips, they qualify. This is true whether you're a W-2 employee or a 1099 independent contractor.

For 1099 workers (rideshare, delivery, etc.), you report tips as part of your self-employment income and then claim the deduction on Schedule 1-A. The deduction reduces your federal income tax but does not reduce your self-employment tax (FICA).

What if I'm a manager who sometimes gets tips?

It depends on your primary role. If you're a tipped worker who also has management duties (like a bartender who's also the bar manager), you likely qualify. But if you're primarily a manager who occasionally receives tips from staff, it's less clear. The IRS will look at whether your occupation is "customarily tipped."

What if my employer calls a service charge a "tip" on the receipt?

Labels don't matter — substance does. If the charge was mandatory (the customer couldn't adjust it), the IRS treats it as a service charge, regardless of what it says on the receipt. Only amounts the customer voluntarily adds qualify.

The Income Phaseout

Even if your occupation qualifies and your tips are the right type, there's an income limit to watch:

| Filing Status | Phaseout Begins | Rate | |---|---|---| | Single / Head of Household | $150,000 MAGI | $100 reduction per $1,000 over | | Married Filing Jointly | $300,000 MAGI | $100 reduction per $1,000 over |

Most tipped workers won't hit these thresholds, but if you have a high-earning spouse or significant non-tip income, run the numbers. Our calculator handles the phaseout math automatically →

How to Prove Your Tips Qualify

The IRS can ask you to substantiate your deduction. Here's what helps:

A daily tip log — date, shift, cash amount, credit card amount. The IRS's own Form 4070A is a template, or you can use any consistent format (including Untaxed's built-in tracker).
W-2 Box 7 — shows your Social Security tips. For 2025 this may include non-qualified amounts, but it's a useful baseline.
Pay stubs — many employers break out tip income per pay period.
Bank deposit records — for cash tips you deposited.

Starting in 2026, employers will be required to report qualified tips separately, so documentation will be much simpler.

Check Your Eligibility Now

Don't guess — know for sure.

Use our free eligibility checker → to see if your occupation qualifies
Calculate your estimated savings → based on your tips and tax bracket