The IRS has issued official guidance on the “No Tax on Tips” provision included in the One Big Beautiful Bill. Beginning in 2025, workers in occupations that regularly received tips before December 31, 2024, can deduct up to $25,000 of tips each year from their taxable income—without needing to itemize. The deduction applies through 2028 and phases out at higher income levels. While this creates real savings for millions of tipped workers, tips remain subject to Social Security and Medicare taxes, and the IRS will finalize the list of qualifying jobs by October 2025.