{"id":1079,"date":"2025-11-26T19:00:26","date_gmt":"2025-11-26T19:00:26","guid":{"rendered":"https:\/\/cwsdemowebsites.com\/swiftlogic\/?p=1079"},"modified":"2025-12-10T19:10:55","modified_gmt":"2025-12-10T19:10:55","slug":"irs-proposed-regulations-on-tip-income-deduction-2","status":"publish","type":"post","link":"https:\/\/cwsdemowebsites.com\/swiftlogic\/2025\/11\/26\/irs-proposed-regulations-on-tip-income-deduction-2\/","title":{"rendered":"IRS Proposed Regulations on Tip Income Deduction"},"content":{"rendered":"\r\n\r\n\r\n\r\n\n<p class=\"wp-block-paragraph\">The IRS has released proposed regulations (REG\u2011110032\u201125) clarifying how workers in tipped occupations may claim a new deduction under H.R. 1, the One Big Beautiful Bill Act. These rules are designed to help employees understand which tips qualify, which do not, and how to report them correctly. The guidance is part of the IRS\u2019s broader effort to make sure taxpayers can take advantage of new deductions while staying compliant.<br><strong>Key Highlights<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To qualify, tips must be voluntarily given by customers and paid in acceptable forms (cash, check, card, gift card, or mobile payment denominated in cash). Most digital assets are excluded.<\/li>\n\n\n\n<li>Service charges (like automatic gratuities added by restaurants) do not count as qualified tips.<\/li>\n\n\n\n<li>Tips connected to unlawful activity are not eligible, and certain occupations, such as health services, performing arts, or athletics, are excluded under IRS rules.<\/li>\n\n\n\n<li>The deduction is capped at $25,000 per return, not per person, for tax years 2025\u20132028.<\/li>\n\n\n\n<li>Phase\u2011out thresholds begin at $150,000 AGI (single\/HOH\/MFS) or $300,000 AGI (joint filers).<\/li>\n\n\n\n<li>Employees must still pay Medicare and Social Security payroll taxes on tip income, even if deductible.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Treasury Tipped Occupation Codes<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The IRS has grouped eligible occupations into eight categories:<br>100s \u2013 Beverage and Food Service<br>200s \u2013 Entertainment and Events<br>300s \u2013 Hospitality and Guest Services<br>400s \u2013 Home Services<br>500s \u2013 Personal Services<br>600s \u2013 Personal Appearance and Wellness<br>700s \u2013 Recreation and Instruction<br>800s \u2013 Transportation and Delivery<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What This Means for You<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For workers in tipped jobs, this deduction could provide meaningful tax savings, but only if tips meet IRS definitions. The IRS has already released draft forms and promised transition guidance for 2025 to help employers and employees report tip income correctly.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"wp-block-paragraph\">Source: <a href=\"https:\/\/www.journalofaccountancy.com\/news\/2025\/sep\/details-on-irs-prop-regs-on-tip-income-deduction\/\"><span style=\"text-decoration: underline;\">Journal of Accountancy<\/span><\/a>, September 19, 2025, by Martha Waggoner.<br>This summary is for informational purposes only and does not constitute legal or tax advice. For authoritative guidance, consult <a href=\"https:\/\/www.irs.gov\/\"><span style=\"text-decoration: underline;\">IRS.gov<\/span><\/a> or a licensed tax professional.<\/p>\n\r\n","protected":false},"excerpt":{"rendered":"<p>The IRS has released proposed regulations (REG\u2011110032\u201125) clarifying how workers in tipped occupations may claim a new deduction under H.R. 1, the One Big Beautiful Bill Act. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1079","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/posts\/1079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/comments?post=1079"}],"version-history":[{"count":5,"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/posts\/1079\/revisions"}],"predecessor-version":[{"id":1126,"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/posts\/1079\/revisions\/1126"}],"wp:attachment":[{"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/media?parent=1079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/categories?post=1079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cwsdemowebsites.com\/swiftlogic\/wp-json\/wp\/v2\/tags?post=1079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}