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    Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Treasury Department releases ‘preliminary list‘ of "no tax on tips" occupations, (Sep 9, 2025)

    Law Firms Mentioned:Littler Mendelson
    Organizations Mentioned:Littler Mendelson, PC | U.S. Department of Labor

    By Robert Pritchard, David Jordan, William Weissman, Eli Freedberg, and Dan Boatright of Littler Mendelson

    The Treasury Department this week released a "preliminary list" of occupations that may be entitled to claim the "no tax on tips" deduction. As a reminder, the "One Big Beautiful Bill Act" (OBBBA) provides an above-the-line tax deduction for "qualifi ...

    By Robert Pritchard, David Jordan, William Weissman, Eli Freedberg, and Dan Boatright of Littler Mendelson

    The Treasury Department this week released a "preliminary list" of occupations that may be entitled to claim the "no tax on tips" deduction. As a reminder, the "One Big Beautiful Bill Act" (OBBBA) provides an above-the-line tax deduction for "qualified tips." To qualify for the deduction, the tips must (among other conditions) be received by an individual engaged in an occupation that "customarily and regularly received tips" on or before December 31, 2024. The OBBBA requires the Treasury secretary to publish an official list of qualifying occupations by October 2, 2025.

    Notably, the Treasury Department's preliminary list of occupations that "customarily and regularly received tips" includes many occupations that the U.S. Department of Labor (DOL) has long interpreted as *not* customarily and regularly receiving tips, such as dishwashers and cooks. This is an important difference. The DOL has construed the Fair Labor Standards Act (FLSA) to prohibit employers from applying a "tip credit" to satisfy the minimum wage obligation for employees who are not engaged in an occupation that customarily and regularly receives tips. Further, when an employer does take a tip credit, only employees who also "customarily and regularly receive tips" can participate in a mandatory tip pool.[1] It had been assumed that the Treasury secretary would align its list with the DOL's approach due to the use of the parallel "customarily and regularly" language in both the FLSA and the OBBBA. It remains to be seen whether the Treasury secretary will attempt to reconcile its final list with the DOL's approach (or whether the broader interpretation suggested by the Treasury Department's preliminary list may one day influence the DOL's narrower interpretation).

    Another potential consequence of the Treasury Department's broad preliminary list is that it may ease the reporting burden of employers that were concerned that the OBBBA might require them to separately track tips received by dual job employees while working in traditional tipped occupations (like wait staff and bartender) from tips received from a tip pool by that same employee while working in another position (like dishwasher or cook), assuming that only the former category of tips would qualify for the deduction.

    The Treasury Department's preliminary list includes 68 occupations spread across eight industries:

    Beverage & Food Service

    • Bartenders

    • Wait Staff

    • Food Servicers, Nonrestaurant

    • Dining Room and Cafeteria Attendants and Bartender Helpers

    • Chefs and Cooks

    • Food Preparation Workers

    • Fast Food and Counter Workers

    • Dishwashers

    • Host Staff, Restaurant, Lounge, and Coffee Shop

    • Bakers

    Entertainment & Events

    • Gambling Dealers

    • Gambling Change Persons and Booth Cashiers

    • Gambling Cage Workers

    • Gambling and Sports Book Writers and Runners

    • Dancers

    • Musicians and Singers

    • Disc Jockeys, Except Radio

    • Entertainers and Performers

    • Digital Content Creators

    • Ushers, Lobby Attendants, and Ticket Takers

    • Locker Room, Coatroom, and Dressing Room Attendants

    Hospitality & Guest Services

    • Baggage Porters and Bellhops

    • Concierges

    • Hotel, Motel, and Resort Desk Clerks

    • Maids and Housekeeping Cleaners

    Home Services

    • Home Maintenance and Repair Workers

    • Home Landscaping and Groundskeeping Workers

    • Home Electricians

    • Home Plumbers

    • Home Heating and Air Conditioning Mechanics and Installers

    • Home Appliance Installers and Repairers

    • Home Cleaning Service Workers

    • Locksmiths

    • Roadside Assistance Workers

    Personal Services

    • Personal Care and Service Workers

    • Private Event Planners

    • Private Event and Portrait Photographers

    • Private Event Videographers

    • Event Officiants

    • Pet Caretakers

    • Tutors

    • Nannies and Babysitters

    Personal Appearance & Wellness

    • Skincare Specialists

    • Massage Therapists

    • Barbers, Hairdressers, Hairstylists, and Cosmetologists

    • Shampooers

    • Manicurists and Pedicurists

    • Eyebrow Threading and Waxing Technicians

    • Makeup Artists

    • Exercise Trainers and Group Fitness Instructors

    • Tattoo Artists and Piercers

    • Tailors

    • Shoe and Leather Workers and Repairers

    Recreation & Instruction

    • Golf Caddies

    • Self-Enrichment Teachers

    • Recreational and Tour Pilots

    • Tour Guides and Escorts

    • Travel Guides

    • Sports and Recreation Instructors

    Transportation & Delivery

    • Parking and Valet Attendants

    • Taxi and Rideshare Drivers and Chauffeurs

    • Shuttle Drivers

    • Goods Delivery People

    • Personal Vehicle and Equipment Cleaners

    • Private and Charter Bus Drivers

    • Water Taxi Operators and Charter Boat Workers

    • Rickshaw, Pedicab, and Carriage Drivers

    • Home Movers

    The Treasury Department stated that an "official proposed list" (which is expected to be "substantially the same" as the preliminary list) will be published in the Federal Register, at which time public comments will be requested. Employers with employees who receive tips and who are hoping to take advantage of the OBBBA's "no tax on tips" deduction should continue to monitor developments and may want to submit comments at the appropriate time.

    Footnotes:

    1 In contrast, when an employer pays its employees a cash wage of at least the minimum wage, the FLSA permits employers to impose mandatory tip pool arrangements that include non-supervisory employees, even if they do not customarily and regularly receive tips.

    This article was also published in Connecticut Business & Industry Association (CBIA).

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

    Robert Pritchard, David Jordan, William Weissman, Eli Freedberg and Dan Boatright

    Littler Mendelson

    633 West Fifth Street

    63rd Floor

    California

    90071

    United States

    Tel.: +1 213 443-4245

    E-mail: JKlein@littler.com

    URL: www.littler.com/

    (c) Mondaq Ltd, 2025 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com

    Attorneys: (Littler Mendelson).

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