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Draft list of occupations that qualify for new tip deduction released

Authors

  • Kristie Lowery

    EY US Workforce Tax Services Leader & EY US Employment Tax Leader

  • Debera Salam

    EY Employment Tax Advisory Services Associate Director

5 minute read 15 Sep 2025
Related topics
Tax

Treasury and the IRS anticipate that upcoming proposed regulations will include substantially the same list.

The Treasury Department has released a preliminary list of the occupations that will qualify for the new federal deduction for tips enacted in the "One Big Beautiful Bill Act" (P.L. 119-21, OBBBA) for tax years 2025 through 2028. The official proposed list of occupations will be part of forthcoming proposed regulations, but Treasury and the IRS said they anticipate that list to be "substantially the same" as the preliminary list.

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Under the OBBBA, cash tips and the individual's occupation must be reported on certain Forms 1099 and on Form W-2 beginning with calendar year 2025. The IRS announced that it will not update 2025 individual information returns/statements (Forms W-2/1099) or withholding tables to reflect those changes and that the reporting will apply beginning with Forms W-2 due on February 1, 2027, for calendar year 2026.

 

The preliminary list sets out the proposed list of occupations that customarily and regularly received tips on or before December 31, 2024. The list includes the Treasury tipped occupation code (TTOC) that must be included on Form W-2 starting in 2026, the occupation title, the occupation description, illustrative examples, and the Related SOC Code(s).

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Summary 

The Treasury Department and IRS have released a preliminary list of occupations eligible for the new federal deduction for tips, effective for tax years 2025 through 2028. The list includes the TTOC, which must be included on Forms W-2, along with the associated occupation title and descriptions.

About this article

Authors

  • Kristie Lowery
    EY US Workforce Tax Services Leader & EY US Employment Tax Leader
  • Debera Salam
    EY Employment Tax Advisory Services Associate Director
Related topics
Tax

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