On April 10, the IRS released final regulations to implement and provide guidance regarding new Section 224, enacted as part of the One Big Beautiful Bill Act (P.L. 119-21).  Section 224 allows single filers who earn up to $150,000 annually or married couples who earn up to $300,000, to deduct up to $25,000 in qualified tips received during the tax year in an occupation that customarily and regularly received tips on or before December 31, 2024.  (See prior coverage.)  No deduction is allowed under section 224 for any year beginning after December 31, 2028.  The final regulations made several, generally minor, changes to the proposed regulations based on feedback the IRS received during the comment process.  The final regulations list 71 job titles that “customarily and regularly receive[] tips,” and so would qualify for the deduction.  This list adds three additional job titles to the proposed regulation’s list of 68: floral designers, visual artists, and gas pump attendants.

The final regulations also provide additional guidance on the requirement that tips be reported, further clarification on the definition of cash tips, specific guidance for certain eligible and ineligible occupations and activities, continued relief from the specified service trade or business exclusion, and new anti-abuse rules.