IRS Issues Final Rules Implementing 'No Tax on Tips' for 70+ Occupations

The IRS on April 14, 2026, issued final regulations implementing Section 224 of the Internal Revenue Code to define "qualified tips" for an income tax deduction, completing a key provision of the One, Big, Beautiful Bill Act of July 4, 2025. The final rule identifies more than 70 occupations that customarily and regularly receive tips, creating a new deduction for qualifying workers.

Earlier rules addressed FICA taxation of tips, with final regulations (T.D. 10044) establishing which occupations qualify under tip tax provisions. The regulations cover restaurant servers, bartenders, hotel staff, delivery workers, and other service employees who rely on tip income.

Tipped workers in covered occupations should review the final occupation list to determine eligibility for the new deduction, which could affect tax planning for millions of Americans in the service sector.