Final Regulations on Tips Deduction

Individuals who receive “qualified tips” in an occupation that customarily and regularly received tips on or before December 31, 2024, can claim a personal deduction, whether or not they itemize other personal deductions. Final regulations clarify who can claim the deduction and other relevant rules. The final regulations expand the list to include visual artists and floral designers in the personal services category and add gas pump attendants in the transportation and delivery category. Tips received in the course of a specified service trade or business (e.g., law, accounting) are not “qualified tips.” To be deductible, tips must be reported on Form W-2, Form 4237, Form 1099-NEC, or Form 1099-K.  #IdeaoftheDay