Workers typically customarily receiving tips—like servers, bartenders, hair stylists, delivery drivers, digital content creators, dancers, and musicians—could benefit from the tax break. That includes about 68 job categories across sectors like food & beverage, hospitality, events, personal care, recreation, and transportation.
Note: Only cash tips reported to employers qualify. Electronic or non-cash tips don’t count. Eligibility also depends on income: it phases out if you're earning above the thresholds mentioned.
While it might sound generous, the deduction only helps a narrow slice of workers—mostly in tip-heavy industries. Plus, some experts warn this could entrench low base wages, argue that raising the minimum wage would do more for workers, and warn of long-term budget impact.
Yes—some tipped workers just got a break. But if you’re not accurately tracking tips, or earning more, this policy could feel more like a tease than a win. Handle with care—and log every dollar.