“No tax on tips” explained

Like the “No Tax on Social Security” provision in the O.B.B.B. (One Big Beautiful Bill), the “No Tax on Tips is a misnomer:

First - This provision starts in 2025, so if you qualify, you will be able to claim the deduction (not a credit) on your 2025 return. The tip deduction is an "above the line" deduction and will (should) be the amount that appears in box 7 on your W-2.

This is a temporary deduction, ends in 2028, so a 4 year deduction. Tips continue to be subject to Social Security and Medicare tax. The deduction is limited to $12,500 in tips per tax payer, so $25k for MFJ filing, $12.5 for single filers. Self employed ppl who get tips can claim them.

Must be in a profession that customarily receives tips. Must be cash tips (this includes credit card tips, but would not include, say, a piece of art as a tip, to use a silly example). There is an income cap at which point the deduction phases out: $150k for single/$300k for MFJ.

Do back of the house people you tip out get the deduction (ie bussers/dish washers)? It doesn't seem so as they are not considered tipped employees - of course, those tip-outs don't hit the W-2, so they probably aren't ever claimed anyhow.

Below is a link to a list released by the Treasury of occupations that customarily receive tips (copy below and paste into your browser):

https://home.treasury.gov/system/files/136/Tipped-Occupations-Detailed-8-27-2025.pdf