Employers with tipped workers, here’s something worth paying attention to. The U.S. Treasury and IRS just released a preliminary draft list of occupations that could qualify for the new “No Tax on Tips” provision.
This is the first real piece of guidance we’ve seen since the announcement, and it gives us a clearer picture of who may be covered. Spoiler alert: it’s not just bartenders and servers.
So, What’s the “No Tax on Tips” Rule Again?
Starting January 1, 2025 and running through the end of 2028, employees in qualifying roles won’t pay federal income tax on their tips. Notice I said income tax. This does not mean tips are free from Social Security and Medicare tax (FICA) — those still apply.
The catch? To count as “qualified,” the tips have to come from an occupation that was customarily tipped on or before December 31, 2024. That’s why this draft list matters — it’s the IRS’s first swing at defining exactly what “customarily tipped” really means.
A Closer Look: More Than Just Restaurants
Yes, food and beverage staff are on there — bartenders, wait staff, hotel bellhops. No surprise. But the draft goes further than a lot of people expected:
Personal Care & Wellness → hairstylists, barbers, massage therapists, manicurists, tattoo artists
Home Services → cleaners, landscapers, plumbers, movers
Transportation & Delivery → taxi and rideshare drivers, pizza and grocery delivery, valet attendants
Entertainment & Events → casino dealers, DJs, wedding planners, photographers
That’s a wide net. If you’ve got staff in any of these buckets, it’s worth paying attention now rather than later.
What Employers Should Keep in Mind
Here’s the quick-and-dirty:
This is an employee credit. It doesn’t change how you run payroll. You still withhold and report taxes on tips the same way.
Paychecks won’t change. Employees will see the benefit when they file their annual return, not on their weekly stub.
Communication is everything. Employees will hear about this — probably on TikTok or in the breakroom. Getting ahead of it means you control the message and set the right expectations.
Why You Should Care
This draft list is not final, but it’s a solid starting point. It gives you, the employer, something tangible to work with. Instead of vague headlines, we now have job titles and categories we can point to.
Bottom line: This isn’t just a restaurant story anymore — it touches salons, home services, events, transportation, and more. If tips run through your business, now’s the time to:
Review which roles in your company might qualify
Prepare to answer questions from staff
Keep an eye out for the finalized list in the coming months
👉 At Computer Payroll, we’ll keep breaking this down in plain English so you don’t have to wade through government PDFs. Stay tuned — and if you’ve got tipped employees, now’s the time to get familiar with this update.