The U.S. Treasury Department has officially released a list of 68 occupations eligible for a new tax deduction on tips, a move set to impact millions of workers in the service and digital economies. The "No Tax on Tips" policy includes a wide range of professions, from casino dealers and hospitality staff to modern roles like digital content creators.
Key Takeaways
- The U.S. Treasury Department has finalized a list of 68 jobs qualifying for the new "No Tax on Tips" policy.
- Workers in eligible roles can claim a tax deduction of up to $25,000 on their tip income.
- The list includes traditional tipped roles in casinos and restaurants, as well as modern jobs like digital content creators and livestreamers.
- A key requirement is that the tips must be entirely voluntary; mandatory service charges do not qualify for the deduction.
New Tax Policy Targets Tipped and Digital Workers
The Treasury Department confirmed the implementation of a new tax rule designed to provide relief for workers who rely heavily on gratuities. The policy, officially detailed on Friday, identifies specific job categories where employees can now deduct a significant portion of their tip income when filing their taxes next year.
This initiative covers a broad spectrum of the American workforce. It includes long-established tipped positions such as casino dealers, cage workers, and sportsbook employees. The policy also extends to the wider hospitality industry, benefiting restaurant servers, bartenders, and hotel staff.
Adapting to the Modern Economy
In a significant update reflecting current economic trends, the list also recognizes professions within the digital space. Occupations such as digital content creators, video bloggers, podcasters, and livestreamers are now eligible for the tip deduction.
A Focus on Tip-Dependent Industries
According to Treasury officials, the selection process for the 68 jobs focused on industries where tips have historically constituted a major part of employee compensation. The goal was to provide a meaningful tax break to these workers.
Joseph Lavorgna, Counselor to the Treasury Secretary, explained the department's rationale during a statement on Friday morning.
"The Treasury’s approach was let’s look at the industries that historically have people dependent heavily on tips, so that was the starting point," Lavorgna stated.
He emphasized the importance of including newer professions that have become integral to the 21st-century economy.
"What’s really important is it’s expanded to take into account the 21st-century economy. We’ve got a lot of digital content providers. Podcasters, livestreamers, people of that sort, which is a very important and growing industry," he added.
Impact on the Las Vegas Workforce
The new tax rule is expected to have a substantial impact in states like Nevada, where the casino and hospitality industries are major employers. Data from the U.S. Bureau of Labor Statistics for 2023 highlights the concentration of these jobs in the state.
Nevada was home to over 17,000 casino dealers in 2023, which represents approximately 21% of all dealer jobs in the United States. This figure is notable given that Nevada's population is less than 1% of the national total.
Nevada's Share of Casino Jobs (2023)
- Gaming Dealers: 21% of U.S. total
- Sports Book Writers/Runners: 15% of U.S. total
- Gaming Cage Workers: 15% of U.S. total
- Gaming Change Persons: 12% of U.S. total
While these percentages are significant, the policy also addresses a common criticism regarding the income levels of these professions. Critics have argued that the tax break may not benefit many workers because the jobs are often low-paying.
Average Pay and Tip-Sharing
Federal data from 2023 provides a snapshot of the average annual income for these roles across the country, before accounting for recent wage increases from new union contracts in Las Vegas.
The national averages were:
- Gaming Dealers: $40,030 per year
- Gaming Cage Workers: $36,750 per year
- Gaming Change Persons: $36,030 per year
- Sportsbook Workers: $32,030 per year
It is important to note that tip-sharing policies common in many casinos often increase the total take-home pay for these employees. The new deduction is expected to provide further financial relief.
Key Details and Eligibility Requirements
The Treasury Department has outlined specific criteria for tips to qualify under the new deduction. The most critical rule is that the tip must be voluntary. Any payment that is mandatory, such as an automatic service charge or a required minimum tip, is not eligible for the deduction.
"People at IRS and Treasury, broadly, wanted to make sure that people who are working for tips get the benefit advantage to it. But again, it has to be voluntary," Lavorgna clarified.
This distinction is crucial for both employees and employers to understand. A tip given freely by a customer without obligation qualifies, while a fee added automatically to a bill does not.
Implementation and Public Feedback
Officials described the rapid implementation of the program as a significant achievement. The process of refining the rules is ongoing and will continue through the end of the year. To ensure transparency and gather public input, the Treasury will open a 30-day public comment period starting next week.
The department has committed to reviewing all feedback received during this period. This process allows stakeholders, including workers and employers, to voice opinions and suggest clarifications to the policy before it is fully finalized.
For employees who are uncertain if their specific job qualifies, Lavorgna advised a clear course of action. He suggested first speaking with their employer for clarification. If questions remain, consulting a professional tax preparer is the next recommended step. Official information and updates will also be published on the IRS website, IRS.gov.
