As discussed in our earlier blog post here, the One Big Beautiful Bill Act (OBBBA) allows for a provision of “no tax” on tips and overtime. This has turned out to be a bit of a mess, as it pertains to 2025 reporting to the employees, due to insufficient time for the Social Security Administration and the IRS to make the changes to their forms to account for it. Not to mention many payroll systems were not prepared for this brand new retroactive reporting, especially as it pertains to qualified overtime. With that being said, 2025 will be treated as a transition year with some very loose reporting requirements.
On November 5, 2025, the IRS issued Notice 2025-62, providing the latest details of handling the transition reporting for 2025 and relief from certain penalties. To summarize the latter notice, it states that employers will not be penalized for failing to report the qualified tips and/or qualified overtime for 2025. While not a requirement, employers are encouraged to provide employees with the occupation code and the amount of qualified tips and qualified overtime for tax year 2025, so the employee has readily-available information necessary to claim the deduction. Employers can make the information available to their employees through an online portal, additional written statements provided to the employees, other secure methods or in the case of qualified overtime compensation, in Box 14 of the employee’s Form W-2. Forthcoming from the IRS is guidance for individuals who address how they can claim the deduction for qualified tips and qualified overtime compensation when they file their taxable year 2025 return.
While the IRS is suggesting that information can be reported on a W-2 form for 2025, it may not be wise in doing so. Internal Revenue Code (IRC) § 7434 allows employees to bring a civil action for fraudulent filing of an information return, with damages of $5,000 per employee. Therefore, doing nothing will not generate a penalty, but doing it wrong on the W-2 could be costly.
As a PayMaster client, we will not report Qualified Tips, the Treasury Tipped Occupation Code (TTOC) or Qualified Overtime anywhere on the Form W-2 for 2025. Employees will see the total amount of tips and overtime reported on their final paycheck stub of 2025. This is due to all of the exclusions for some tips and overtime not meeting the definition of “qualified,” and it is virtually impossible for PayMaster to accurately and retroactively calculate the amount for 2025
Here are the definitions of what meets qualification:
Qualified Tips must be:
- paid in cash or an equivalent medium
- received from customers
- paid voluntarily by the customer and not subject to negotiation. For example, in the case of a restaurant that imposes an automatic 18% service charge for large parties and distributes that amount to waiters, bussers and kitchen staff, if the tip is added with no option for the customer to disregard or modify it, the amounts distributed to the workers from it are NOT qualified tips.
Qualified Overtime must be:
- only the compensation that exceeds the regular rate of pay (the “half” portion of the “time-and-a-half” of compensation)
- required to be paid by the Fair Labor Standards Act (FLSA)
Treasury Tipped Occupation Code List
The following is a list of occupations that customarily and regularly received tips on or before December 31, 2024, and includes the TTOC, the occupation title, a description of the occupation and examples for each entry, as taken from the Federal Register:
(It’s important to note that under the OBBBA, tips received in certain specified fields—including health, law, accounting, actuarial science, performing arts, athletics, consulting, financial services, brokerage services, illegal activity, prostitution or any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners—do not qualify for the deduction, even if the occupation is listed here. The specified field exclusion depends upon the business of the employer, therefore, a self-employed piano player might not qualify for the deduction while a piano player employed by a hotel would qualify. The Treasury and IRS plan to issue more detailed guidance in the future.)
Beverage & Food Service
- TTOC 101: Bartenders
- Description: Mix and serve drinks to patrons, directly or through waitstaff.
- Examples: barkeep, mixologist, taproom attendant, sommelier
- TTOC 102: Wait Staff
- Description: Receives orders and serves food and beverages to patrons at tables in dining establishments.
- Examples: cocktail waitress, dining car server
- TTOC 103: Food Servers, Nonrestaurant
- Description: Serve food to individuals outside of a restaurant environment, such as in hotel rooms, residential care facilities or cars.
- Examples: room service food server, boat hop, beer cart server
- TTOC 104: Dining Room and Cafeteria Attendants and Bartender Helpers
- Description: Facilitate food service. Clean tables; remove dirty dishes; replace soiled table linens; set tables; replenish supply of clean linens, silverware, glassware, and dishes; supply service bar with food; and serve items such as water, condiments, and coffee to patrons.
- Examples: bar back, bar helper, busser
- TTOC 105: Chefs and Cooks
- Description: Direct (and may participate) in the preparation, seasoning and cooking of salads, soups, fish, meats, vegetables, desserts or other foods.
- Examples:Executive Chef, pastry chef, sous chef, fast food cook, private chef, restaurant cook, saucier, food truck cook, banquet cook, caterer
- TTOC 106: Food Preparation Workers
- Description: Perform a variety of food preparation duties other than cooking, such as preparing cold foods and shellfish, slicing meat and brewing coffee or tea.
- Examples: salad maker, sandwich maker, fruit and vegetable parer, kitchen steward
- TTOC 107: Fast Food and Counter Workers
- Description: Serve customers at a counter or from a steam table. Perform duties such as taking orders and serving food and beverages. May take payment. May prepare food and beverages.
- Examples: barista, ice cream server, cafeteria server
- TTOC 108: Dishwashers
- Description: Clean dishes, kitchen, food preparation equipment or utensils.
- Examples: dish room worker, silverware cleaner
- TTOC 109: Host Staff, Restaurant, Lounge, and Coffee Shop
- Description: Welcome patrons, seat them at tables or in a lounge and help ensure quality of facilities and service.
- Examples: Maître d’hôtel, dining room host
- TTOC 110: Bakers
- Description: Mix and bake ingredients to produce breads, rolls, cookies, cakes, pies, pastries or other baked goods
- Examples: bread baker, cake baker, bagel baker, pastry finisher
Entertainment & Events
- TTOC 201: Gambling Dealers
- Description: Operate gambling games. Stand or sit behind a table and operate games of chance by dispensing the appropriate number of cards or blocks to players or operate other gambling equipment. Distribute winnings or collect players’ money or chips. May compare the house’s hand against players’ hands.
- Examples: blackjack dealer, craps dealer, poker dealer, roulette dealer, pit clerk
- TTOC 202: Gambling Change Persons and Booth Cashiers
- Description: Exchange coins, tokens, and chips for patrons’ money. May issue payoffs and obtain customer’s signature upon receipt. May operate a booth in the slot machine area and furnish change persons with money bank at the start of the shift or count and audit money in drawers.
- Examples: slot attendant, mutuel teller
- TTOC 203: Gambling Cage Workers
- Description: In a gambling establishment, conduct financial transactions for patrons. Accept patron’s credit application and verify credit references to provide check-cashing authorization or to establish house credit accounts. May reconcile daily summaries of transactions to balance books. May sell gambling chips, tokens or tickets to patrons, or to other workers for resale to patrons. May convert gambling chips, tokens or tickets to currency upon patron’s request. May use a cash register or computer to record transactions.
- Examples: casino cashier, cage cashier
- TTOC 204: Gambling and Sports Book Writers and Runners
- Description: Post information enabling patrons to wager on various races and sporting events. Assist in the operation of games, such as keno and bingo. May operate random number-generating equipment and announce the numbers for patrons. Receive, verify and record patrons’ wagers. Scan and process winning tickets presented by patrons, and pay out winnings for those wagers.
Examples: betting runner, bingo worker, keno runner, race book writer
- Description: Post information enabling patrons to wager on various races and sporting events. Assist in the operation of games, such as keno and bingo. May operate random number-generating equipment and announce the numbers for patrons. Receive, verify and record patrons’ wagers. Scan and process winning tickets presented by patrons, and pay out winnings for those wagers.
- TTOC 205: Dancers
- Description: Perform dances
- Examples: club dancer, dance artist
- TTOC 206: Musicians and Singers
- Description: Play one or more musical instruments or sing.
- Examples: instrumentalist, accompanist, lounge singer
- TTOC 207: Disc Jockeys, Except Radio
- Description: Play prerecorded music for live audiences at venues or events such as clubs, parties or wedding receptions. May use techniques such as mixing, cutting or sampling, to manipulate recordings. May also perform as emcee (master of ceremonies.)
- Examples: DJ, club DJ
- TTOC 208: Entertainers and Performers
- Description: Entertain audiences with artistic expression.
- Examples: comedian, clown, magician, street performer
- TTOC 209: Digital Content Creators
- Description: Produce and publish on digital platforms original entertainment or personality-driven content, such as live streams, short-form videos or podcasts.
- Examples: streamer, online video creator, social media influencer, podcaster
- TTOC 210: Ushers, Lobby Attendants, and Ticket Takers
- Description: Assist patrons at entertainment events by performing duties, such as collecting admission tickets and passes from patrons, assisting in finding seats, searching for lost articles and helping patrons locate such facilities as restrooms and telephones.
- Examples: ticket collector, theater usher
- TTOC 211: Locker Room, Coatroom, and Dressing Room Attendants
- Description: Provide personal items to patrons or customers in locker rooms, dressing rooms, or coatrooms.
- Examples: coat checker, washroom attendant, bathhouse attendant
Hospitality & Guest Services
- TTOC 301: Baggage Porters and Bellhops
- Description: Handle baggage for travelers at transportation terminals or for guests at hotels or similar establishments.
- Examples: hotel baggage handler, curbside airport check-in assistant
- TTOC 302: Concierges
- Description: Assist patrons at hotel or apartment buildings with personal services. May take messages, arrange or give advice on transportation, business services or entertainment or monitor guest requests for housekeeping and maintenance.
- Examples: hotel guest service agent, activities concierge
- TTOC 303: Hotel, Motel, and Resort Desk Clerks
- Description: Accommodate hotel, motel, and resort patrons by registering and assigning rooms to guests, issuing room keys or cards, transmitting and receiving messages, keeping records of occupied rooms and guests’ accounts, making and confirming reservations and presenting statements to and collecting payments from departing guests.
- Examples: front desk clerk, registration clerk
- TTOC 304: Maids and Housekeeping Cleaners
- Description: Perform any combination of light cleaning duties to maintain commercial establishments, such as hotels, in a clean and orderly manner. Duties may include making beds, replenishing linens, cleaning rooms and halls and vacuuming.
- Examples: hotel maid, housekeeping staff
Home Services
- TTOC 401: Home Maintenance and Repair Workers
- Description: Perform work to keep machines, mechanical equipment or the structure of a building in repair.
- Examples: handyman, roofer, window repairer, house painter (interior or exterior), flooring installer
- TTOC 402: Home Landscaping and Groundskeeping Workers
- Description: Landscape or maintain grounds of property using hand or power tools or equipment. Workers typically perform a variety of tasks, which may include any combination of the following: sod laying, mowing, trimming, planting, watering, fertilizing, digging, raking, sprinkler installation and installation of mortarless segmental concrete masonry wall units.
- Examples: lawn mower, gardener, tree trimmer, weed sprayer
- TTOC 403: Home Electricians
- Description: Install, maintain, and repair electrical wiring, equipment, and fixtures. Ensure that work is in accordance with relevant codes. May install or service exterior lights, intercom systems or electrical control systems.
- Examples: electrician
- TTOC 404: Home Plumbers
- Description: Assemble, install, alter, and repair pipelines or pipe systems that carry water, steam, air or other liquids or gases. May install heating and cooling equipment and mechanical control systems.
- Examples: plumber, pipefitter, steamfitter, sprinkler installer
- TTOC 405: Home Heating and Air Conditioning Mechanics and Installers
- Description: Install or repair heating, central air conditioning, HVAC or refrigeration systems, including oil burners, hot-air furnaces and heating stoves.
- Examples: air conditioning repairer, heating system installer, chimney sweep
- TTOC 406: Home Appliance Installers and Repairers
- Description: Repair, adjust or install all types of electric or gas household appliances, such as refrigerators, washers, dryers and ovens.
- Examples: washing machine installer, dishwasher repairer
- TTOC 407: Home Cleaning Service Workers
- Description: Perform any combination of light cleaning duties to maintain private households in a clean and orderly manner. Duties may include making beds, replenishing linens, cleaning rooms and halls and vacuuming.
- Examples: house cleaner, pool cleaner, carpet cleaner, window washer
- TTOC 408: Locksmiths
- Description: Repair and open locks, make keys, change locks and safe combinations and install and repair safes.
- Examples: safe installer, key maker
- TTOC 409: Roadside Assistance Workers
- Description: Provide on-road assistance to drivers whose vehicles have broken down.
- Examples: tow truck driver, car battery technician, tire repairer, tire changer, car fuel deliverer
Personal Services
- TTOC 501: Personal Care and Service Workers
- Description: Provide personalized assistance to individuals with disabilities or illness who require help with personal care and activities of daily living support (e.g., feeding, bathing, dressing, grooming, toileting, ambulation). May also provide help with tasks such as preparing meals, doing light housekeeping and laundry. Work is performed in various settings depending on the needs of the care recipient and may include locations such as their home, place of work, out in the communityor at a daytime nonresidential facility.
- Examples: elderly companion, personal care aide, butler, house sitter, personal valet
- TTOC 502: Private Event Planners
- Description: Coordinate activities of staff or clients to make arrangements for private events.
- Examples: wedding planner, party planner
- TTOC 503: Private Event and Portrait Photographers
- Description: Photograph people, landscapes or other subjects. May use lighting equipment to enhance a subject’s appearance. May use editing software to produce finished images and prints.
- Examples: wedding photographer, headshot photographer
- TTOC 504: Private Event Videographers
- Description: Operate video or film camera to record images or scenes of private events.
- Examples: wedding videographer
- TTOC 505: Event Officiants
- Description: Lead and facilitate the ceremony for life events, such as weddings or funerals. Ceremonies may be religious or civil services.
- Examples: wedding officiant, funeral celebrant, clergy, vow renewal officiant
- TTOC 506: Pet Caretakers
- Description: Feed, water, groom, bathe, exercise, or otherwise provide care to promote and maintain the well-being of pets.
- Examples: pet groomer, pet sitter, pet walker, kennel worker, pet trainer
- TTOC 507: Tutors
- Description: Instruct individual students or small groups of students in academic subjects to supplement formal class instruction or to prepare students for standardized or admissions tests.
- Examples: reading tutor, math tutor, language tutor
- TTOC 508: Nannies and Babysitters
- Description: Attend to children at businesses and private households. Perform a variety of tasks, such as dressing, feeding, bathing and overseeing play.
- Examples: au pair, child sitter at hotels and gyms
Personal Appearance & Wellness
- TTOC 601: Skincare Specialists
- Description: Provide skincare treatments to face and body to enhance an individual’s appearance.
- Examples: facialist, electrologist, spa esthetician
- TTOC 602: Massage Therapists
- Description: Perform therapeutic massages of soft tissues and joints. May assist in the assessment of range of motion and muscle strength or propose client therapy plans.
- Examples: masseuse, deep tissue massage therapist, sports massage therapist
- TTOC 603: Barbers, Hairdressers, Hairstylists, and Cosmetologists
- Description: Provide beauty or barbering services such as cutting, coloring and styling hair, massaging and treating scalps, trimming beards or giving shaves.
- Examples: wig stylist, beautician, hair colorist, hair cutter
- TTOC 604: Shampooers
- Description: Shampoo and rinse customers’ hair.
- Examples: scalp treatment specialist, shampoo assistant
- TTOC 605: Manicurists and Pedicurists
- Description: Clean and shape customers’ fingernails and toenails. May polish or decorate nails.
- Examples: nail technician, fingernail sculptor, nail painter
- TTOC 606: Eyebrow Threading and Waxing Technicians
- Description: Enhance and maintain clients’ eyebrows using techniques such as threading, waxing or tweezing.
- Examples: eyebrow waxer
- TTOC 607: Makeup Artists
- Description: Design and apply makeup looks.
- Examples: wedding makeup artist, party makeup artist
- TTOC 608: Exercise Trainers and Group Fitness Instructors
- Description: Instruct or coach groups or individuals in exercise activities for the primary purpose of personal fitness. Demonstrate techniques and form, observe participants and explain to them corrective measures necessary to improve their skills. Develop and implement individualized approaches to exercise.
- Examples: aerobics trainer, yoga instructor, personal trainer
- TTOC 609: Tattoo Artists and Piercers
- Description: Design and execute tattoos on a client’s skin, often using a needle and ink. Create openings in the human body for the insertion of jewelry. May consult clients on aftercare to promote healing and prevent infection.
- Examples: tattoo artist, ear piercer, nose piercer
- TTOC 610: Tailors
- Description: Design, make, alter, repair or fit garments.
- Examples: tailor, seamstress, clothing alterations worker
- TTOC 611: Shoe and Leather Workers and Repairers
- Description: Construct, decorate or repair leather and leather-like products, such as luggage, shoes and saddles. May use hand tools.
- Examples: cobbler, shoe shiner
Recreation & Instruction
- TTOC 701: Golf Caddies
- Description: Assist a golfer during a round of golf by providing practical support and strategic advice. May carry the golfer’s bag, manage their clubs, offer guidance on club selection or course strategy.
- Examples: golf caddie, golf cart attendant
- TTOC 702: Self-Enrichment Teachers
- Description: Teach or instruct individuals or groups for the primary purpose of self-enrichment, rather than for an occupational objective, educational attainment, competition or fitness.
- Examples: knitting instructor, piano teacher, art instructor, dance teacher
- TTOC 703: Recreational and Tour Pilots
- Description: Pilot and navigate the flight of fixed-wing aircraft, helicopters or other airborne vehicles for recreational or touring purposes. Excludes regional, national and international airline pilots, and emergency services pilots.
- Examples: helicopter tour pilot, hot air balloon aeronaut, skydiving pilot
- TTOC 704: Tour Guides and Escorts
- Description: Escort individuals or groups on sightseeing tours or through places of interest, such as industrial establishments, public buildings, and art galleries.
- Examples: museum guide, sightseeing guide
- TTOC 705: Travel Guides
- Description: Plan, organize, and conduct long-distance travel, tours and expeditions for individuals and groups.
- Examples: cruise director, river expedition guide
- TTOC 706: Sports and Recreation Instructors
- Description: Teach or instruct individuals or groups for the primary purpose of recreation, rather than for an occupational objective, educational attainment, competition or fitness.
- Examples: diving instructor, ski instructor, tennis teacher, surfing instructor
Transportation & Delivery
- TTOC 801: Parking and Valet Attendants
- Description: Park vehicles or issue tickets for customers in a parking lot or garage. May park or tend to vehicles in environments such as a hotel or restaurant. May collect fee.
- Examples: parking garage attendant, valet parker
- TTOC 802: Taxi and Rideshare Drivers and Chauffeurs
- Description: Drive a motor vehicle to transport passengers on a planned or unplanned basis.
- Examples: cab driver, personal driver
- TTOC 803: Shuttle Drivers
- Description: Drive a motor vehicle to transport passengers on a planned route and scheduled basis. May collect a fare. Excludes taxi and rideshare drivers, chauffeurs, municipal bus drivers and school bus drivers.
- Examples: airport shuttle driver, hotel shuttle driver, rental car shuttle driver
- TTOC 804: Goods Delivery People
- Description: Drive truck or other vehicle over established routes or within an established territory to deliver goods, such as food products, appliances or furniture, or pick up or deliver packages. May also take orders or collect payment at point of delivery.
- Examples: pizza delivery driver, grocery delivery driver, bicycle courier, package delivery person, appliance delivery driver, furniture delivery person
- TTOC 805: Personal Vehicle and Equipment Cleaners
- Description: Wash or otherwise clean personal vehicles, machinery, and other equipment. Use such materials as water, cleaning agents, brushes, cloths and hoses.
- Examples: car wash attendant, auto detailer, boat waxer
- TTOC 806: Private and Charter Bus Drivers
- Description: Drive bus or motor coach for charters or private carriage. May assist passengers with baggage.
- Examples: motor coach bus driver, tour bus driver
- TTOC 807: Water Taxi Operators and Charter Boat Workers
- Description: Operate water taxi boats or provide services to passengers on private charter boats. May assist in navigational activities.
- Examples: water taxi captain, air boat operator, charter boat deckhand, charter boat steward
- TTOC 808: Rickshaw, Pedicab, and Carriage Drivers
- Description: Operate rickshaw, pedicab or carriage to transport passengers.
- Examples: horse drawn carriage driver, bike taxi driver
- TTOC 809: Home Movers
- Description: Manually move furniture, boxes, luggage or other materials to or from a home or dwelling.
- Examples: furniture mover, packer
While we make every attempt to ensure the accuracy and reliability of the information provided in this document, the information is provided “as-is” without warranty of any kind. Romeo Chicco or PayMaster, Inc. does not accept any responsibility or liability for the accuracy, content, completeness, legality or reliability of the information contained. Consult with your CPA, Attorney, and/or HR Professional, as the reporting under this new federal law will change and additional guidance from the IRS is likely.
