OBBBA year-end guide
Qualified Tips and Tipped Occupation Codes
OBBBA created a temporary deduction for qualified tips. Employers must report qualified tip amounts and the Treasury Tipped Occupation Code (TTOC) for tipped employees.
Treasury Tipped Occupation Code (TTOC) list
Treasury's preliminary list of occupations that customarily and regularly received tips on or before December 31, 2024 — 68 occupation codes with descriptions, illustrative job titles, and related SOC codes. Use it to identify the codes that apply to your tipped positions before you complete the year-end form.
PDF, 13 pages. The official proposed list will be published in the Federal Register with forthcoming proposed regulations.
What changed
For tax years 2025 through 2028, eligible employees may deduct up to $25,000 of qualified tips per year, with a phase-out beginning at $150,000 of modified adjusted gross income ($300,000 joint).
Tips remain wages: they are still subject to FICA withholding and still reported as income. The deduction happens on the employee's return, but it depends on employer reporting.
Which tips qualify
A tip generally qualifies when it is:
- Paid voluntarily by the customer, with the amount and whether to tip determined by the customer.
- Received in cash, by card, or through a valid tip-sharing or tip-pooling arrangement.
- Received by an employee working in an occupation that customarily and regularly received tips on or before December 31, 2024.
- Properly reported to the employer.
Which tips do not qualify
- Mandatory service charges, auto-gratuities, and mandatory large-party fees — the customer did not choose to pay them.
- Tips received in a specified service trade or business (for example, health, law, accounting, consulting, performing arts, athletics, financial and brokerage services).
- Amounts recharacterized as tips that are really wages, commissions, or fees.
Treasury Tipped Occupation Codes (TTOCs)
Treasury published a list of occupations that customarily and regularly received tips as of December 31, 2024. Each listed occupation has a Treasury Tipped Occupation Code, or TTOC. Going forward, the employee's TTOC is reported with their qualified tips so the IRS can confirm the occupation is eligible.
One employee has one primary TTOC for a given position. If an employee genuinely works two tipped positions (for example, a bartender who also works as a banquet server), tell us — the split matters.
Treasury groups the qualifying occupations into these broad categories:
- Beverage and food service — for example bartenders, wait staff, food servers, dining room attendants, bussers, bakers, cooks, fast food and counter workers, hosts and hostesses.
- Entertainment and events — for example gambling dealers and cage workers, dancers, musicians and singers, digital content creators, ushers, ticket takers.
- Hospitality and guest services — for example baggage porters and bellhops, concierges, hotel and resort desk clerks, maids and housekeeping cleaners.
- Home services — for example home maintenance and repair workers, landscaping and groundskeeping workers, electricians, plumbers, house cleaners, locksmiths, movers.
- Personal services — for example personal care and service workers, private event planners, photographers and videographers, event officiants, pet caretakers, tutors, nannies and babysitters.
- Personal appearance and wellness — for example barbers, hairdressers and cosmetologists, shampooers, manicurists and pedicurists, skincare specialists, massage therapists, tattoo artists, tailors, shoe and leather workers, eyebrow and makeup artists.
- Recreation and instruction — for example golf caddies, self-enrichment teachers, recreational and tour pilots, tour and travel guides, sports and recreation instructors.
- Transportation and delivery — for example parking and valet attendants, taxi and rideshare drivers, shuttle drivers, goods delivery people, home movers, water taxi operators, rickshaw and pedicab drivers, private and charter bus drivers.
What we need from you before year end
For every tipped employee, we need the qualifying occupation and the TTOC you want us to report, plus how tips reach payroll (declared cash tips, card tips paid through payroll, tip pool allocations, or a POS import).
This site is general educational information about payroll reporting under the One Big Beautiful Bill Act (OBBBA). It is not tax, legal, or accounting advice. Guidance from the IRS and Treasury continues to evolve — confirm your specific facts with your tax advisor and your Time & Pay representative before you rely on it.