Internal Revenue Bulletin 2025-42 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2025–42
October 14, 2025
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
REG-108673-25, page 494.
Tax return preparers must use a preparer tax identification
number (PTIN) on returns they prepare for compensation.
The PTIN must be renewed annually. The IRS charges a user
fee on each PTIN application or application for renewal to
recover costs for issuing and renewing PTINs. The IRS has
recalculated the PTIN user fee and determined the full cost
for each application or application for renewal is $10, plus
an amount payable directly to a third-party contractor. These
regulations therefore propose to decrease the current PTIN
user fee of $11 to $10, plus an amount payable directly to
the third-party contractor. REG-108673-25. Published Sep-
tember 30, 2025.
T.D. 10035, page 484.
Tax return preparers must use a preparer tax identification
number (PTIN) on returns they prepare for compensation.
The PTIN must be renewed annually. The IRS charges a
user fee on each PTIN application or application for renewal
to recover costs for issuing and renewing PTINs. The IRS
has recalculated the PTIN user fee and determined the full
cost for each application or application for renewal is $10,
plus an amount payable directly to a third-party contrac-
tor. These interim final regulations therefore decrease the
current PTIN user fee of $11 to $10, plus amount payable
directly to the third-party contractor. TD 10035. Published
September 30, 2025.
INCOME TAX
REG-110032-25, page 495.
These proposed regulations would identify occupations that
customarily and regularly received tips on or before Decem-
ber 31, 2024, and would provide a definition of “qualified
tips” for purposes of the income tax deduction for qualified
tips.
REG-112261-24; REG-116085-23, page 522.
The document withdraws a notice of proposed rulemaking con-
taining proposed regulations regarding certain matters relating
to corporate separations, incorporations, and reorganizations
qualifying, in whole or in part, for nonrecognition of gain or loss.
The document also withdraws a notice of proposed rulemak-
ing containing proposed regulations that would have required
multi-year tax reporting for corporate separations and related
transactions. The proposed regulations would have affected
corporations and their shareholders and security holders.
Rev. Proc. 2025-30, page 489.
This revenue procedure provides procedures for taxpayers
requesting private letter rulings from the Internal Revenue
Service regarding certain issues pertaining to transactions
intended to qualify under section 355 of the Internal Revenue
Code, including representations, information, and analysis
that taxpayers requesting these rulings should submit to the
IRS. This revenue procedure revokes Notice 2024-38, 2024-
21 I.R.B. 1211, supersedes Rev. Proc. 2024-24, 2024-21
I.R.B. 1214, and modifies Rev. Proc. 2025-1, 2025-1 I.R.B.
1 and Rev. Proc. 2017-52, 2017-41 I.R.B. 283.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
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by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
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This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
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The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
October 14, 2025 Bulletin No. 2025–42

Part I
26 CFR 300.11: Fee for obtaining a preparer tax
identification number
T.D. 10035
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 300
Preparer Tax Identification
Number (PTIN) User Fee
Update
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Interim final rule.
SUMMARY: This document contains
interim final regulations relating to
the imposition of certain user fees on
tax return preparers. These regulations
reduce from $11 to $10 the amount of
the user fee to apply for or renew a pre-
parer tax identification number (PTIN)
and affect individuals who apply for or
renew a PTIN. The Independent Offices
Appropriation Act of 1952 authorizes the
charging of user fees. The text of these
interim final regulations also serves as
the text of the proposed regulations set
forth in the notice of proposed rulemak-
ing on this subject in this issue in the Pro-
posed Rules section of this edition of the
Federal Register.
DATES: Effective date: These final reg-
ulations are effective on September 30,
2025.
Applicability date: For date of applicabil-
ity, see §300.11(d) of these interim final
regulations.
FOR FURTHER INFORMATION
CONTACT: Concerning the interim
final regulations, Jamie Song at (202)
317-6845; concerning cost methodology,
Maria E. Arias-Buchanan at (202) 803-
9569 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Authority
This document contains interim final
amendments to 26 CFR part 300 regard-
ing user fees to apply for or renew a PTIN.
The Independent Offices Appropria-
tion Act of 1952 (IOAA), which is codi-
fied at 31 U.S.C. 9701, authorizes agen-
cies to prescribe regulations that establish
user fees for services provided by the
agency. The IOAA provides that regula-
tions implementing user fees are subject
to policies prescribed by the President;
these policies are set forth in the Office of
Management and Budget Circular A-25,
58 FR 38142 (July 15, 1993) (OMB Cir-
cular A-25).
Under OMB Circular A-25, Federal
agencies that provide services that con-
fer benefits on identifiable recipients are
to establish user fees that recover the full
cost of providing the service. An agency
that seeks to impose a user fee for gov-
ernment-provided services must calculate
the full cost of providing those services.
In general, a user fee should be set at an
amount that allows the agency to recover
the direct and indirect costs of providing
the service, unless the Office of Manage-
ment and Budget (OMB) grants an excep-
tion. OMB Circular A-25 provides that
agencies are to review user fees biennially
and update them as necessary.
Background
A. PTIN Requirement
Section 6109(a)(4) of the Internal Rev-
enue Code (Code) authorizes the Sec-
retary of the Treasury or the Secretary’s
delegate (Secretary) to prescribe regula-
tions for the inclusion of a tax return pre-
parer’s identifying number on a return,
statement, or other document required to
be filed with the IRS. On September 30,
2010, the Department of the Treasury
(Treasury Department) and the IRS pub-
lished final regulations (TD 9501) under
section 6109 in the Federal Register (75
FR 60309) to provide that, for returns or
claims for refund filed after December
31, 2010, the identifying number of a tax
return preparer is the individual’s PTIN or
such other number prescribed by the IRS
in forms, instructions, or other appropri-
ate guidance. Those regulations require a
tax return preparer who prepares or who
assists in preparing all or substantially all
of a tax return or claim for refund after
December 31, 2010, to have a PTIN.
B. PTIN User Fee
Final regulations (TD 9503) published
in the Federal Register (75 FR 60316) on
September 30, 2010, established a $50
user fee to apply for or renew a PTIN,
based on a 2010 Cost Model. In addition,
a $14.25 fee for a new application and a
$13 fee for an application for renewal was
payable directly to a third-party contrac-
tor.
In 2013, the IRS conducted a biennial
review of the PTIN user fee and issued a
new Cost Model that estimated an increase
of the PTIN user fee, to $54. However, the
IRS determined to keep the fee at $50 for
the next two years.
In 2015, the IRS conducted a biennial
review of the PTIN user fee and issued a
new Cost Model, which determined that
the full cost of administering the PTIN
program going forward was reduced from
$50 to $33 per application or application
for renewal, plus a $17 fee per application
or application for renewal payable directly
to a third-party contractor. Final regula-
tions (TD 9781) published in the Federal
Register (81 FR 52766) on August 10,
2016, superseded and adopted tempo-
rary regulations (TD 9742) published in
the Federal Register (80 FR 66792) on
October 30, 2015, and established the $33
annual user fee to apply for or renew a
PTIN, plus $17 per application or appli-
cation for renewal payable directly to a
third-party contractor.
In 2017, the IRS again conducted a
biennial review of the PTIN user fee and
issued a new Cost Model, which deter-
mined that the amount of the fee going for-
ward should be reduced to $31 per appli-
cation or application for renewal, plus an
amount payable directly to a third-party
contractor. However, on June 1, 2017,
October 14, 2025 484 Bulletin No. 2025–42

before a notice of proposed rulemaking
proposing to reduce the amount of the
PTIN user fee was issued, the IRS was
enjoined from charging a PTIN user fee.
In Steele v. United States, 260 F. Supp. 3d
52 (D.D.C. 2017), the United States Dis-
trict Court for the District of Columbia
concluded that the Treasury Department
and the IRS lacked the statutory author-
ity to charge a PTIN user fee and enjoined
the IRS from charging a PTIN user fee.
See Steele, 2017 WL 3621747 (D.D.C.
July 10, 2017) (final judgment and perma-
nent injunction). The government filed an
appeal and on March 1, 2019, the United
States Court of Appeals for the District
of Columbia Circuit reversed the district
court’s decision and lifted the injunction
against charging the PTIN user fee. See
Montrois v. United States, 916 F.3d 1056
(D.C. Cir. 2019) (holding that a PTIN pro-
vides tax return preparers a specific bene-
fit by allowing them to provide an identi-
fying number that is not a social security
number on returns they prepare and stat-
ing that the permissible amount of the fee
would be the same regardless of whether
the specific benefit was instead the ability
to prepare tax returns for compensation).
The case was remanded to the United
States District Court for the District of
Columbia to determine whether the fee
amounts were excessive. Id. at 1068.
In 2019, the IRS again conducted a
biennial review of the PTIN user fee and
issued a new Cost Model, which deter-
mined that the amount of the fee going for-
ward should be reduced to $21 per appli-
cation or application for renewal, plus a
$14.95 fee per application or application
for renewal payable directly to a third-
party contractor. Final regulations (TD
9903) published in the Federal Register
(85 FR 43433) on July 17, 2020, adopted
the proposed regulations (REG-117138-
17) published in the Federal Register (85
FR 21126) on April 16, 2020, and estab-
lished the $21 annual user fee to apply for
or renew a PTIN, plus $14.95 per appli-
cation or application for renewal payable
directly to a third-party contractor.
In Steele v. United States, 657 F. Supp.
3d 23 (D.D.C. 2023), the United States
District Court for the District of Colum-
bia on remand considered whether the fee
amounts were excessive under the IOAA
(Steele opinion). Explaining that while an
agency may charge only the reasonable
cost incurred to provide a service, or the
value of the service to the recipient, which-
ever is less, the district court allowed that
the activities charged for need only be
“reasonably related” to the cost to the
agency and the value to the recipient, and
the amount may include both “direct and
indirect costs” associated with the service
provided. Id. at 37. The court further noted
that where an activity produces an inde-
pendent public benefit, the fee that would
otherwise be charged must be reduced by
that portion of the costs attributable to the
public benefit. Id. at 37-38.
The district court concluded that the
PTIN fees for fiscal years (FYs) 2011
through 2017 were excessive to the extent
they were based on: (1) the activities
already conceded by the government in
the case;
1
(2) any compliance activities
other than direct and indirect costs of
investigating ghost preparers who do not
list their PTINs on returns they prepared
for compensation as required by law, han-
dling complaints regarding improper use
of a PTIN, use of a compromised PTIN,
or use of a PTIN obtained through iden-
tity theft, and composing the data to refer
those specific types of complaints to other
IRS business units; (3) any suitability
activities; (4) any support activities, other
than those for the provision of PTINs and
maintenance of the PTIN database, that
facilitated provision of an independent
benefit to the agency and the public; and
(5) any activities of the third-party con-
tractor, other than those related to the issu-
ance, renewal, and maintenance of PTINs,
that facilitated provision of an independent
benefit to the agency and the public. Id. at
48. The plaintiffs in Steele filed a notice of
appeal on March 26, 2025, and the gov-
ernment filed a notice of cross-appeal on
May 22, 2025, to the Court of Appeals
for the District of Columbia Circuit. The
appeal is pending as of the publication of
these interim final regulations.
In its 2023 biennial review, the IRS,
taking into account the Steele opinion,
determined the amount of the user fee
as $11 per application or application for
renewal, plus an $8.75 fee per application
or application for renewal payable directly
to a third-party contractor. The amount
payable directly to the third-party con-
tractor also took into account certain costs
that were addressed in the Steele opinion.
Subsequently, the IRS entered into a mod-
ified contract that allows the government
to pay those costs rather than the individ-
uals who apply for or renew a PTIN. Final
regulations (TD 9997) published in the
Federal Register (89 FR 42362) on May
15, 2024, adopted the interim final rule
and cross-referencing notice of proposed
regulations (REG-106203-23) published
in the Federal Register (88 FR 68456) on
October 4, 2023, and established the $11
annual user fee to apply for or renew a
PTIN, plus $8.75 per application or appli-
cation for renewal payable directly to a
third-party contractor.
In accordance with the biennial review
requirement in OMB Circular A-25 and
taking into account the Steele opinion,
the IRS has issued a new Cost Model that
re-determines costs that the government
continues to incur for providing PTINs
and administering the PTIN program, and
re-calculates the amount of the user fee
as $10 per application or application for
renewal, plus an $8.75 fee per application
or application for renewal payable directly
to a third-party contractor. The amount
payable directly to the third-party contrac-
tor also takes into account certain costs
that were addressed in the Steele opinion.
The government is authorized to charge
a PTIN user fee under the IOAA because,
in exchange for the fee, it provides a ser-
vice by issuing and maintaining PTINs,
which provide tax return preparers a spe-
cific benefit by allowing them to provide
an identifying number that is not a social
security number on returns and claims for
1
The government previously conceded $26,576,661, $26,623,420, and $25,685,247 for amounts collected in FY 2011, FY 2012, and FY 2013, respectively, which related to certain communi-
cations, compliance, Office of Professional Responsibility (OPR), and operations support activities; $8,737,123 and $9,010,458 for amounts collected in FY 2014 and FY 2015, respectively,
which related to certain communications, Office of the Director, Strategy and Finance, suitability, compliance and complaint referrals, competency and standards, continuing education, OPR,
enrolled agent and enrolled retirement plan agent department, and contractor processing activities; and $6,904,345 and $6,784,762 for amounts collected in FY 2016 and FY 2017, respec-
tively, which related to certain communications, Office of the Director, Strategy and Finance, suitability, compliance and complaint referrals, OPR, enrolled agent and enrolled retirement plan
agent department, and contractor processing activities.
Bulletin No. 2025–42 485 October 14, 2025

October 14, 2025 486 Bulletin No. 2025–42
refund and to prepare returns and claims
for refund for compensation. OMB Cir-
cular A-25 states that user fees should
be collected in advance of or simultane-
ously with the provision of a service. The
PTIN user fee is collected when tax return
preparers apply for or renew their PTINs
during the application season, which
begins annually in October.
Explanation of Provisions
The IRS follows generally accepted
accounting principles (GAAP) in calcu-
lating the full cost of administering PTIN
applications and renewals. The Federal
Accounting Standards Advisory Board
(FASAB) is the body that establishes
GAAP that apply for Federal reporting
entities, such as the IRS. FASAB pub-
lishes the FASAB Handbook of Fed-
eral Accounting Standards and Other
Pronouncements, as Amended (Current
Handbook), available at https://files.fasab.
gov/pdffiles/2024_FASAB%20Handbook.
pdf. The Current Handbook includes the
Statement of Federal Financial Account-
ing Standards (SFFAS) No. 4: Managerial
Cost Accounting Standards and Concepts.
SFFAS No. 4 establishes internal costing
standards to accurately measure and man-
age the full cost of Federal programs, and
the methodology below is in accordance
with SFFAS No. 4.
1. Cost Estimation of Direct Salary
The IRS uses various cost-measure-
ment techniques to estimate the cost
attributable to the program. These tech-
niques include using various timekeeping
systems to measure the time required to
accomplish activities, or using informa-
tion provided by subject-matter experts on
the time devoted to a program. To deter-
mine the salary and benefits cost incurred
to provide the service of providing a
PTIN, the IRS estimated the number of
full-time employees required to conduct
activities related to the costs of issuing
and renewing PTINs. The number of full-
time employees is based on both current
employment numbers and future hiring
estimates. The IRS aggregated the hours
spent by employees for performing each
task, identified by cost center, related to
the PTIN user fee, and calculated the per-
centage of time spent on the PTIN user
fee based on a full-time schedule of 2,088
hours annually, with leave and training
hours allocated to the resulting percent-
ages based on employees’ tasks related to
the PTIN user fee.
2. Overhead
When the indirect cost of a service or
activity is not specifically identified from
the cost accounting system, an overhead
rate is added to the identifiable direct
cost to arrive at full cost. Overhead is an
indirect cost of operating an organization
that is not specifically identifiable with
an activity. Overhead includes costs of
resources that are jointly or commonly
consumed by one or more organizational
unit’s activities but are not specifically
identifiable to a single activity. These
costs can include:
• Financial, human resources, informa-
tion technology, and general manage-
ment and administrative.
• Rent and building.
• Procurement, other services, and con-
sulting.
• Property, plant, and equipment.
• Publication services.
• Research, analytical, statistical,
library and legal services.
To calculate the overhead allocable to
a service, the IRS applies an overhead rate
to the identified direct salary and benefits
and other direct costs. The overhead rate is
the ratio of the IRS’s indirect salary, bene-
fits, and non-salary costs of business divi-
sions that do not interact with taxpayers
to the salary and benefits costs of business
divisions that interact with taxpayers. The
IRS calculates an overhead rate annually.
For the FY 2025 user fee review, an over-
head rate of 62.92 percent was used.
3. Calculation of PTIN User Fee
The IRS used projections for FYs
2026 through 2028 to determine the
direct and indirect costs associated with
the PTIN program that are includible in
the PTIN user fee calculation taking into
account the Steele opinion. Direct costs
are incurred by the Return Preparer Office
and include staffing and contract-related
costs for activities, processes, and proce-
dures related to administering the PTIN
program. Staffing costs included in the
PTIN user fee calculation relate to the
compliance activities of investigating
ghost preparers; handling complaints
regarding the improper use of a PTIN,
use of a compromised PTIN, or use of
a PTIN obtained through identity theft;
and composing the data to refer those
specific types of complaints to other IRS
business units. The PTIN user fee also
takes into account indirect costs for sup-
port activities related to the provision
of PTINs and maintenance of the PTIN
database. In accordance with Steele, the
PTIN user fee calculation does not take
into account compliance costs other than
those described in this paragraph, costs
incurred by the Suitability Department,
support costs other than those described
in this paragraph, and costs previously
conceded by the government in Steele, as
detailed earlier in this preamble.
The salary and benefits for the work
performed related to the PTIN program is
projected to be $17,555,984 in total over
FYs 2026 through 2028. In addition to sal-
ary and benefits and overhead expenses,
the IRS projects incurring travel, training,
and supplies costs of $63,579 in each of
FYs 2026 through 2028. The total salary
and benefits, travel, training, and supplies,
and overhead expenses projected are
shown below:
ExpenseFY 2026FY 2027FY 2028Total
Salary and benefits$5,693,975$5,850,559$6,011,450$17,555,984
Travel, training, and supplies$63,579$63,579$63,579$190,737
Overhead (62.92 percent)$3,582,649$3,681,172$3,782,404$11,046,225

Bulletin No. 2025–42 487 October 14, 2025
The total cost for FYs 2026 through
2028 is therefore projected to be
$28,792,946. The number of users is
based on FY 2024 numbers adjusted by
a projected increase in applications in
FYs 2026, 2027, and 2028. Dividing this
total cost by the projected population of
users for FYs 2026 through 2028 results
in a cost per application or application for
renewal of $10 as follows: $28,792,946
(total cost) ÷ 2,829,524 (number of appli-
cations) = $10.18 (cost per application or
application for renewal).
Taking into account the full amount
of these costs, the amount of the PTIN
user fee per application or application for
renewal is $10.
Costs related to a third-party contrac-
tor’s activities for the issuance, renewal,
and maintenance of PTINs, such as pro-
cessing applications and operating a call
center, are included in the PTIN user fee
calculation, in accordance with Steele.
This amount is currently set at $8.75 per
application or application for renewal.
The third-party contractor was chosen
through a competitive bidding process.
The amount of the third-party contractor
portion may change in 2026 when the con-
tract expires and will be re-computed.
Special Analyses
I. Regulatory Planning and Review
These interim final regulations are
not subject to review under section 6(b)
of Executive Order 12866 pursuant to
the Memorandum of Agreement (July 4,
2025) between the Treasury Department
and OMB regarding review of tax regu-
lations.
II. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6), it is hereby
certified that these interim final regula-
tions will not have a significant economic
impact on a substantial number of small
entities. These final regulations affect
all individuals who prepare or assist in
preparing all or substantially all of a tax
return or claim for refund for compensa-
tion. Only individuals, not businesses, can
have a PTIN. Thus, the economic impact
of these regulations on any small entity
generally will be a result of an individual
tax return preparer who is required to have
a PTIN owning a small business or a small
business otherwise employing an individ-
ual tax return preparer who is required to
have a PTIN. The Treasury Department
and the IRS estimate that approximately
915,437, 942,900, and 971,187 individ-
uals will apply annually for an initial or
renewal PTIN in FYs 2026, 2027, and
2028, respectively. Although these reg-
ulations will likely affect a substantial
number of small entities, the economic
impact on those entities is not signifi-
cant. These regulations will establish an
$10 fee per application or application for
renewal (plus $8.75 payable directly to the
third-party contractor), which is a reduc-
tion from the previously established fee
and will not have a significant economic
impact on a small entity. Accordingly, the
rule is not expected to have a significant
economic impact on a substantial number
of small entities, and a regulatory flexibil-
ity analysis is not required.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggre-
gate, or by the private sector, of $100 mil-
lion in 1995 dollars, updated annually for
inflation. This rule does not include any
Federal mandate that may result in expen-
ditures by State, local, or Tribal govern-
ments, or by the private sector in excess of
that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These interim final regulations do
not have federalism implications and do
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
V. Good Cause
The annual PTIN application and
renewal period for the 2025 filing season
will begin shortly. It would be unneces-
sary and contrary to the public interest for
the IRS to continue to charge the current,
higher user fee pending public comment
after the IRS has determined pursuant
to the biennial review conducted under
OMB Circular A-25 that the PTIN user
fee should be reduced going forward.
To enable the reduced fee amount to be
in effect for PTINs issued to or renewed
by tax return preparers preparing returns
or claims for refund in 2026, the Trea-
sury Department and the IRS find that
there is good cause to dispense with (1)
notice and public comment pursuant to 5
U.S.C. 553(b) and (c) and (2) a delayed
effective date pursuant to 5 U.S.C. 553(d).
The Treasury Department and the IRS
will consider public comments submitted
in response to the cross-referenced notice
of proposed rulemaking published in the
Proposed Rules section of this issue of
the Federal Register and will promulgate
a final rule after considering those com-
ments.
VI. Submission to Small Business
Administration
Pursuant to section 7805(f) of the
Code, this Treasury decision has been
submitted to the Chief Counsel for the
Office of Advocacy of the Small Business
Administration for comment on its impact
on small business.
VII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs des-
ignated this rule as not a major rule, as
defined by 5 U.S.C. 804(2).
Drafting Information
The principal author of these regula-
tions is Jamie Song, Office of the Asso-

October 14, 2025 488 Bulletin No. 2025–42
ciate Chief Counsel (Procedure and
Administration). Other personnel from
the Treasury Department and the IRS par-
ticipated in the development of the regu-
lations.
List of Subjects in 26 CFR Part 300
Estate taxes, Excise taxes, Fees, Gift
taxes, Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 300 is
amended as follows:
PART 300—USER FEES
Paragraph 1. The authority citation for
part 300 continues to read in part as follows:
Authority: 31 U.S.C. 9701.
Par. 2. Section 300.11 is amended by
revising paragraphs (b) and (d) to read as
follows:
§300.11 Fee for obtaining a preparer
tax identification number.
* * * * *
(b) Fee. The fee to apply for or renew
a preparer tax identification number is
$10 per year and is in addition to the fee
charged by the contractor.
* * * * *
(d) Applicability date. This section
applies to applications for or renewal of a
preparer tax identification number filed on
or after September 30, 2025.
Edward T. Killen,
Acting Chief Tax Compliance Officer.
Approved: September 15, 2025.
Kenneth J. Kies,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register Septem-
ber 29, 2025, 8:45 a.m., and published in the issue
of the Federal Register for September 30, 2025, 90
FR 46762)

Bulletin No. 2025–42 489 October 14, 2025
Part III
26 CFR 601.201: Rulings and determination letters.
(Also Part I, §§ 355, 1.355-1.)
Rev. Proc. 2025-30
SECTION 1. PURPOSE
This revenue procedure supersedes
Rev. Proc. 2024-24, 2024-21 I.R.B. 1214,
and provides procedures for taxpayers
requesting private letter rulings from
the Internal Revenue Service (IRS) after
September 29, 2025, regarding certain
issues pertaining to transactions intended
to qualify under § 355
1
(Section 355
Transactions), including representations,
information, and analysis that taxpay-
ers requesting these rulings should sub-
mit to the IRS. This revenue procedure
also modifies Rev. Proc. 2025-1, 2025-1
I.R.B. 1, and Rev. Proc. 2017-52, 2017-41
I.R.B. 283, and revokes Notice 2024-38,
2024-21 I.R.B. 1211.
SECTION 2. BACKGROUND
.01 Law.
Section 355(a)(1) provides that, if
certain requirements are met, a corpo-
ration (Distributing) may distribute (i)
stock of a controlled corporation (Con-
trolled) to Distributing’s shareholders,
or (ii) Controlled stock and securities to
Distributing’s shareholders and security
holders, without recognition of gain or
loss to, or inclusion of any amount in the
income of, the shareholders or security
holders.
Section 355(c)(1) provides that no gain
or loss is recognized to Distributing upon
a distribution of Controlled stock, or stock
and securities, to which § 355 (or so much
of § 356 as relates to § 355) applies and
which is not in pursuance of a plan of reor-
ganization.
In a reorganization under §§ 355 and
368(a)(1)(D) (Divisive Reorganization),
Distributing transfers property to Con-
trolled in exchange for consideration (§
361 Consideration). The § 361 Consid-
eration received by Distributing includes
Controlled stock and also may include
money, securities or other debt obliga-
tions of which Controlled is the obligor,
and other property. Controlled also may
assume liabilities of Distributing. To com-
plete the Divisive Reorganization, Dis-
tributing distributes the Controlled stock,
and possibly other § 361 Consideration,
to its shareholders and also may distribute
§ 361 Consideration in satisfaction of its
obligations to holders of its securities or
to other creditors.
.02 Prior Revenue Procedures.
(1) Rev. Proc. 2017-52. Rev. Proc.
2017-52 provides procedures for request-
ing private letter rulings regarding Section
355 Transactions.
(2) Rev. Proc. 2018-53. Rev. Proc.
2018-53, 2018-43 I.R.B. 667, amplified
Rev. Proc. 2017-52 and described the pro-
cedures for requesting rulings on issues
relating to the assumption or satisfaction
of Distributing Debt (as defined therein)
in Divisive Reorganizations and the repre-
sentations, information, and analysis to be
submitted in those requests.
(3) Rev. Proc. 2024-24. Rev. Proc.
2024-24 superseded Rev. Proc. 2018-
53 and modified Rev. Proc. 2017-52 by
deleting Representations 2, 4, and 17
through 21 in section 3 of the Appendix.
Notice 2024-38, which accompanied Rev.
Proc. 2024-24, requested feedback on the
procedures set forth in Rev. Proc. 2024-
24. Notice 2024-38 also described the
then-current views and concerns of the
Treasury Department and the IRS relating
to certain matters addressed in Rev. Proc.
2024-24 and requested feedback on those
matters.
.03 This Revenue Procedure.
Section 3 of this revenue procedure
restates the guidance originally provided
in section 3 of Rev. Proc. 2018-53. Sec-
tion 4 of this revenue procedure restates
the guidance originally provided in Rep-
resentations 2, 4, and 17 through 21 in
section 3 of the Appendix to Rev. Proc.
2017-52.
SECTION 3. APPLICATION AND
PROCEDURES
.01 Ruling requests to which proce-
dures apply.
A taxpayer engaging in a Divisive
Reorganization may request rulings that
no gain or loss will be recognized to Dis-
tributing (i) upon Controlled’s assumption
of liability for an obligation of Distribut-
ing (§ 357(a)), and (ii) upon Distributing’s
receipt of § 361 Consideration and its dis-
tribution of the § 361 Consideration to a
creditor in satisfaction of Distributing’s
debt obligation (§§ 361(b) and (c)).
The procedures described in section
3.03 of this revenue procedure apply to
a request for a ruling to the extent that a
subject of the request is an assumption
by Controlled of liability for Distributing
Debt or the satisfaction of Distributing
Debt with § 361 Consideration. For pur-
poses of this revenue procedure, an obli-
gation is “Distributing Debt” if (a) Distrib-
uting is the obligor, and (b) the obligation
(i) is evidenced by a debt instrument
(defined in § 1.1275-1(d)) that is not a
contingent payment debt instrument sub-
ject to § 1.1275-4 (Non-contingent Debt
Instrument) and (ii) by its terms is payable
only in money. (For example, Distributing
Debt does not include an obligation that,
by its terms, can be satisfied with § 361
Consideration at Distributing’s option.)
.02 Ruling requests on similar or
related transactions.
The IRS will continue to rule on trans-
actions that are not described in section
3.01 of this revenue procedure but are
similar to such transactions. These trans-
actions include assumption or satisfaction
of Distributing’s obligations that are not
Distributing Debt (for example, contin-
gent liabilities) and distributions of § 361
Consideration to Distributing’s sharehold-
ers. However, this revenue procedure does
not describe procedures for requesting
such rulings or the representations, infor-
mation, or analysis that taxpayers request-
ing such rulings should submit. See gen-
erally Rev. Proc. 2025-1 and Rev. Proc.
2017-52.
A taxpayer may request rulings regard-
ing assumption or satisfaction of some
obligations that are, and of other obliga-
tions that are not, Distributing Debt. In
this situation, the taxpayer should follow
the procedures described in section 3.03 of
1
Unless otherwise specified, all “section” or “§” references are to sections of the of the Internal Revenue Code of 1986, as amended (Code) or the Income Tax Regulations (26 CFR part 1).

October 14, 2025 490 Bulletin No. 2025–42
this revenue procedure with respect to the
Distributing Debt and should follow the
procedures described in Rev. Proc. 2025-1
and Rev. Proc. 2017-52 with respect to the
other obligations. Additional representa-
tions, information, and analysis may be
required.
.03 Procedures.
In a request for rulings described in
section 3.01 of this revenue procedure,
the taxpayer should submit (in addition
to the representations, information, and
analysis described in Rev. Proc. 2025-1
and Rev. Proc. 2017-52) information that
describes (1) the Distributing Debt that
will be assumed or satisfied (including the
relevant terms of the Non-contingent Debt
Instruments that evidence the Distributing
Debt and the date or dates on which the
Distributing Debt was incurred), (2) the §
361 Consideration that will be distributed
to creditors in satisfaction of the Distrib-
uting Debt, and (3) the transactions that
will implement Controlled’s assumption
of liability for Distributing Debt or Dis-
tributing’s receipt of § 361 Consideration
and its distribution of § 361 Consideration
to creditors in satisfaction of Distributing
Debt.
The taxpayer should also submit
information and analysis to establish
that (1) any assumption of Distributing
Debt by Controlled will be consideration
received by Distributing in the Divisive
Reorganization, and (2) any distribution
of § 361 Consideration by Distributing to
its creditors in satisfaction of Distributing
Debt will be in connection with the plan of
reorganization.
If, at the time of the first distribution
of Controlled stock to Distributing share-
holders, the assumption or satisfaction of
Distributing Debt is subject to any con-
tingency, the taxpayer should (1) describe
each contingency and any alternative
transactions and (2) establish that there
are one or more substantial business rea-
sons for the plan not being fixed and deter-
mined at that time. Documentation of such
business reasons should be submitted only
if requested.
In addition, the taxpayer should submit
the representations, information, and anal-
ysis set forth in section 3.04 of this reve-
nue procedure.
.04 Representations, information, and
analysis.
The representations, information,
and analysis described in paragraphs (1)
through (8) of this section 3.04 should be
submitted. With respect to these represen-
tations, the taxpayer should not follow the
procedures in section 3.04 of Rev. Proc.
2017-52. Instead, the taxpayer should set
forth each applicable representation and
the additional information and analysis
described in this section 3.04. If the tax-
payer believes that any of the representa-
tions is not applicable, the taxpayer should
explain its rationale for this belief.
If the taxpayer is unable to submit an
applicable representation in the form set
forth in this section 3.04 (Standard Repre-
sentation), the taxpayer should submit (1)
an explanation for its inability to provide
the Standard Representation and (2) the
rationale supporting the issuance of each
relevant requested ruling in the absence of
the Standard Representation. If appropri-
ate, the taxpayer should submit (1) a modi-
fied representation that addresses the same
matter, (2) an explanation of the modifica-
tion, and (3) the rationale supporting the
issuance of each relevant requested ruling,
taking into account the modified Standard
Representation.
The representations in this section 3.04
use terms defined in this revenue pro-
cedure. The taxpayer should include in
its request either (1) definitions of these
terms that are consistent with the defi-
nitions in this revenue procedure or (2)
a statement to the effect that these terms
have the meanings set forth in this revenue
procedure.
(1) Distributing as obligor in substance.
Submit the following REPRESENTA-
TION: Distributing is in substance the
obligor of each Distributing Debt that will
be assumed or satisfied. With respect to
any such Distributing Debt, the taxpayer
should submit information regarding
any co-obligation, guarantee, indemnity,
surety, make-well, keep-well, or similar
arrangement, including security provided
by any person other than Distributing. The
taxpayer also should submit information
and analysis to establish that, taking into
account any such arrangement, Distrib-
uting is in substance the obligor of such
Distributing Debt.
(2) Holder not a Related Person. Sub-
mit the following REPRESENTATION:
No holder of Distributing Debt that will
be assumed or satisfied is a person related
to Distributing or Controlled within the
meaning of § 267(b) or 707(b)(1) (Related
Person). If a holder is a Related Person,
the taxpayer should establish that the §
361 Consideration received by the Related
Person will be used to satisfy an obliga-
tion that is evidenced by a Non-contingent
Debt Instrument and is held by a person
other than a Related Person. The taxpayer
also should submit information and anal-
ysis to address any potential application
of the consolidated return regulations,
including § 1.1502-13(g).
(3) Holder of Distributing Debt. Sub-
mit the following REPRESENTATION:
The holder of Distributing Debt that will
be assumed or satisfied will not hold the
debt for the benefit of Distributing, Con-
trolled, or any Related Person. A collat-
eral benefit received by Distributing from
an arrangement with an intermediary (for
example, facilitation of exchanges of §
361 Consideration for Distributing Debt)
will not be treated as the intermediary
holding Distributing Debt for the benefit
of Distributing, Controlled, or a Related
Person. If an intermediary will acquire
pre-existing Distributing Debt from any
person, and such Distributing Debt will be
satisfied with § 361 Consideration, submit
the following additional REPRESENTA-
TIONS: [Name of intermediary] will not
acquire Distributing Debt from Distribut-
ing, Controlled, or any Related Person.
Neither Distributing, nor Controlled, nor
any Related Person will participate in any
profit gained by [name of intermediary]
upon an exchange of § 361 Consider-
ation; nor will any such profit be limited
by agreement or other arrangement. The
value of the § 361 Consideration received
by [name of intermediary] in satisfaction
of the Distributing Debt will not exceed
the amount to which the holder is entitled
under the terms of the Distributing Debt.
The taxpayer should describe any co-ob-
ligation, guarantee, indemnity, surety,
make-well, keep-well, or similar arrange-
ment, including additional security, pro-
vided to the intermediary by Distributing,
Controlled, or any Related Person for risk
of loss with respect to the Distributing
Debt.
(4) Distributing Debt as historic debt.
Submit the following REPRESENTA-
TION: Distributing incurred the Distrib-

Bulletin No. 2025–42 491 October 14, 2025
uting Debt that will be assumed or satis-
fied (a) before the request for any relevant
ruling is submitted and (b) no later than
60 days before the earliest of the follow-
ing dates: (i) the date of the first public
announcement (as defined in § 1.355-
7(h)(10)) of the Divisive Reorganization
or a similar transaction, (ii) the date of
the entry by Distributing into a binding
agreement to engage in the Divisive Reor-
ganization or a similar transaction, and
(iii) the date of approval of the Divisive
Reorganization or a similar transaction
by the board of directors of Distributing.
A transaction is a similar transaction if it
would have effected a direct or indirect
separation of all, or a significant portion
of, the same assets as the Divisive Reorga-
nization that is the subject of the taxpay-
er’s ruling request (cf. § 1.355-7(h)(12)
and (13) (describing the terms “similar
acquisition (not involving a public offer-
ing)” and “similar acquisition involving
a public offering,” respectively). If Dis-
tributing incurred or will incur any of the
Distributing Debt that will be assumed
or satisfied at a later time, the taxpayer
should establish that, based on all the facts
and circumstances, the borrowing and the
assumption or satisfaction of such Distrib-
uting Debt will result in an allocation of
historic Distributing Debt between Dis-
tributing and Controlled or an exchange of
historic Distributing Debt for Controlled
stock. As one example, the taxpayer may
establish that the proceeds of the more-re-
cently incurred Distributing Debt were
used to satisfy other Distributing Debt
that was incurred no later than the time
described in the representation in this sec-
tion 3.04(4) (cf. Rev. Rul. 79-258, 1979-2
C.B. 143 (in connection with a Divisive
Reorganization, Controlled’s assumption
of liability for debt newly issued by Dis-
tributing to replace historic debt incurred
in connection with the business to be
transferred to Controlled did not cause
§ 357(b) to apply to the assumption)). As
another example, the taxpayer may estab-
lish that the proceeds of the Distributing
Debt assumed or satisfied were or will be
used in Controlled’s business.
(5) Historic average. Submit the fol-
lowing REPRESENTATION: The total
adjusted issue price (determined under
§ 1.1275-1(b)) of Distributing Debt that
will be assumed or satisfied does not
exceed the historic average of the total
adjusted issue price of (a) Distributing
Debt owed to persons other than Related
Persons and (b) obligations that are evi-
denced by Non-contingent Debt Instru-
ments and are owed by other members of
Distributing’s separate affiliated group
(within the meaning of § 355(b)(3)(B)) to
persons other than Related Persons. The
historic average of total adjusted issue
price should be determined based on debt
outstanding as of the close of the eight fis-
cal quarters that ended or will end imme-
diately before the date of approval of the
Divisive Reorganization by the board of
directors of Distributing.
(6) Delayed satisfaction of Distributing
Debt. If applicable, submit the following
REPRESENTATIONS: There are one or
more substantial business reasons for any
delay in satisfying Distributing Debt with
§ 361 Consideration beyond 30 days after
the date of the first distribution of Con-
trolled stock to Distributing’s sharehold-
ers. All the Distributing Debt that will be
satisfied with § 361 Consideration will be
satisfied no later than 180 days after such
distribution. The taxpayer should submit
information and analysis to establish the
substantial business reasons for any delay
in satisfying Distributing Debt after the
30-day period beginning on the date of
the first distribution of Controlled stock to
Distributing’s shareholders. If satisfaction
of any Distributing Debt with § 361 Con-
sideration will occur more than 180 days
after the date of such first distribution, the
taxpayer should submit information and
analysis to establish that, based on all the
facts and circumstances, the satisfaction
will be in connection with the plan of reor-
ganization. Documentation of the matters
described in this section 3.04(6) should be
submitted only if requested.
(7) No replacement of Distributing
Debt. Submit the following REPRE-
SENTATION: Distributing will not
replace any Distributing Debt that will
be assumed or satisfied with previously
committed borrowing, other than bor-
rowing in the ordinary course of business
pursuant to a revolving credit agreement
or similar arrangement. The purpose of
this representation is to establish that the
application of § 361 to the proposed trans-
actions is consistent with the purposes
of § 361. If Distributing is a prospective
borrower under a revolving credit agree-
ment or similar arrangement, the taxpayer
should submit information and analysis to
establish that the agreement or arrange-
ment was not entered into, and amounts of
borrowing provided for therein were not
increased, in a transaction related to the
Divisive Reorganization.
(8) General information and analy-
sis. Submit information and analysis to
establish that, under general principles of
tax law, the transactions (including any
exchange facilitated by an intermediary)
should not be recast, recharacterized, or
otherwise treated as one or more trans-
actions that would not qualify under the
relevant provisions of the Code.
SECTION 4. ADDITIONAL
APPLICATION AND PROCEDURES
.01 Ruling requests to which proce-
dures apply.
The procedures described in section
4.02 of this revenue procedure apply to
a request for rulings for a Section 355
Transaction. For purposes of this section
4, any defined term has the meaning pro-
vided in section 2 of the Appendix to Rev.
Proc. 2017-52.
.02 Procedures.
In a request for rulings described in
section 4.01 of this revenue procedure,
the taxpayer should submit the documen-
tation, factual information, legal analysis,
and representations set forth in Rev. Proc.
2025-1 and Rev. Proc. 2017-52. In addi-
tion, the taxpayer should submit the repre-
sentations described in section 4.03 of this
revenue procedure.
.03 Representations, information, and
analysis.
The representations, information,
and analysis described in paragraphs (1)
through (6) of this section 4.03 should be
submitted. With respect to these repre-
sentations, the taxpayer should follow the
procedures in section 3.04 of Rev. Proc.
2017-52.
(1) Control requirements. Submit the
following REPRESENTATIONS: In the
Distribution, Distributing will distribute
on the same day all the stock and secu-
rities of Controlled that it holds immedi-
ately before the Distribution. No indebt-
edness owed by Controlled to Distributing
after the Distribution will constitute stock

October 14, 2025 492 Bulletin No. 2025–42
or securities of Controlled or any other
entity.
(2) Section 357(b). Submit the follow-
ing REPRESENTATION: Any Liabil-
ities assumed (within the meaning of §
357(d)) by Controlled were incurred in the
ordinary course of business and are asso-
ciated with any assets transferred.
(3) Sections 357(c) and 361(b)(3).
Submit the following REPRESENTA-
TION: The total adjusted basis and the
fair market value of assets transferred by
Distributing to Controlled will each equal
or exceed the sum of (a) the total amount
of the Liabilities assumed (within the
meaning of § 357(d)) by Controlled, and
(b) the total amount of any money and the
fair market value of other property, if any,
received by Distributing and transferred
to its shareholders and its creditors.
(4) Sections 361(b)(3) and (c)(3). Sub-
mit the following REPRESENTATION:
Any Other Property issued or transferred
by Controlled to Distributing in pursuance
of the plan of reorganization will be trans-
ferred by Distributing to its shareholders
in pursuance of the plan of reorganization
or to its creditors in connection with the
reorganization.
(5) Controlled securities. Submit the
following REPRESENTATION: Any
securities issued by Controlled to Distrib-
uting in pursuance of the plan of reorgani-
zation will be transferred by Distributing
to its shareholders in pursuance of the
plan of reorganization or to its creditors
in connection with the reorganization.
(6) Solvency of Distributing and Con-
trolled. Submit the following REPRE-
SENTATION: Immediately after the
transaction, the fair market value of the
assets of each of Distributing and Con-
trolled will exceed the amount of its Lia-
bilities.
SECTION 5. MODIFICATIONS TO
REVENUE PROCEDURE 2025-1
Rev. Proc. 2025-1 is modified as fol-
lows with respect to requests for private
letter rulings postmarked or, if not mailed,
received by the IRS after, September 29,
2025:
.01 Section 7.01(2)(a).
(1) First paragraph. Section 7.01(2)
(a) of Rev. Proc. 2025-1 is modified by
deleting the second sentence of the first
paragraph and adding the following in its
place:
But see section 3.02 of Rev. Proc. 2017-
52, 2017-41 I.R.B. 283, and sections 3.03
and 4.02 of Rev. Proc. 2025-30, 2025-42
I.R.B. 489, for requirements relating to
ruling requests under § 355.
(2) Second paragraph. Section 7.01(2)
(a) of Rev. Proc. 2025-1 is further modi-
fied by deleting the second paragraph and
adding the following in its place:
If the request concerns a corporate
distribution, reorganization, or sim-
ilar transaction, the corporate bal-
ance sheet and profit and loss state-
ment also should be submitted. If
the request relates to a prospective
transaction, the most recent balance
sheet and profit and loss statement
should be submitted. See section 3.02
of Rev. Proc. 2017-52, and sections
3.03 and 4.02 of Rev. Proc. 2025-30,
for requirements relating to ruling
requests under § 355.
.02 Appendix F. Section .01 of Appen-
dix F to Rev. Proc. 2025-1 is modified as
follows:
(1) In the column titled REVENUE
PROCEDURE AND NOTICE, in the text
corresponding to “Subchapter C—Corpo-
rate Distributions, Adjustments, Transfers,
and Reorganizations” found in the column
CODE OR REGULATION SECTION, by
deleting the text and adding the following
text in its place:
Rev. Proc. 77-37, 1977-2 C.B. 568, as
amplified by Rev. Proc. 77-41, 1977-2
C.B. 574, and Rev. Proc. 83-81, 1983-2
C.B. 598, and as modified by Rev.
Proc. 89-30, 1989-1 C.B. 895 (see also
Rev. Proc. 2025-3, this Bulletin), Rev.
Proc. 84-42, 1984-1 C.B. 521 (super-
seded, in part, as to no-rule areas by
Rev. Proc. 2018-3), Rev. Proc. 86-42,
1986-2 C.B. 722, Rev. Proc. 89-50,
1989-2 C.B. 631, Rev. Proc. 2017-52,
2017-41 I.R.B. 283, and Rev. Proc.
2025-30, 2025-42 I.R.B. 489.
(2) In the column titled REVENUE
PROCEDURE AND NOTICE, in the text
corresponding to “355 Checklist question-
naire” found in the column CODE OR
REGULATION SECTION, by deleting
the text and adding the following text in
its place:
Rev. Proc. 2017-52, 2017-41 I.R.B.
283, and Rev. Proc. 2025-30, 2025-42
I.R.B. 489.
SECTION 6. MISCELLANEOUS
Taxpayers and their advisers are
encouraged to contact the Office of
Associate Chief Counsel (Corporate)
with questions and comments regarding
these matters. Taxpayers seeking rulings
described in section 3.01 or 4.01 of this
revenue procedure are encouraged to
request pre-submission conferences. See
section 10.07 of Rev. Proc. 2025-1.
SECTION 7. EFFECT ON OTHER
DOCUMENTS
Notice 2024-38 is revoked. With
respect to requests for private letter rul-
ings postmarked or, if not mailed, received
by the IRS after September 29, 2025, Rev.
Proc. 2025-1 and Rev. Proc. 2017-52
are modified, and Rev. Proc. 2024-24 is
superseded.
SECTION 8. EFFECTIVE DATE
This revenue procedure will apply to
all ruling requests postmarked or, if not
mailed, received by the IRS after Septem-
ber 29, 2025. If a ruling request described
in section 3.01 or 4.01 of this revenue
procedure is pending on such date, the
taxpayer may consider a supplemen-
tal submission with the representations,
information, and analysis described in
sections 3.04 and 4.03 of this revenue pro-
cedure (to the extent this material has not
been submitted).
SECTION 9. PAPERWORK
REDUCTION ACT
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (PRA) generally
requires that a Federal agency obtain the
approval of the Office of Management and
Budget (OMB) before collecting infor-
mation from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. An agency may not conduct or

Bulletin No. 2025–42 493 October 14, 2025
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information dis-
plays a valid control number assigned by
OMB.
The collections of information in this
revenue procedure are in sections 3 and 4.
This information is required to determine
whether a taxpayer would qualify for
tax-free treatment to the extent allowed
under §§ 357 and 361. The collections of
information are required to obtain a ben-
efit. The likely respondents are corpora-
tions that control another corporation, as
well as the management of the corpora-
tion the stock of which is distributed or
that controls the corporation the stock of
which is being distributed. These collec-
tion requirements supplement the existing
collection requirement in Rev. Proc. 2025-
1, which is included in the OMB Control
Number 1545-1522.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue tax law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
SECTION 10. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Grid Glyer of the Office of
Associate Chief Counsel (Corporate). For
further information regarding this revenue
procedure, please contact Mr. Glyer at
(202) 317-3181.

October 14, 2025 494 Bulletin No. 2025–42
Part IV
Notice of Proposed
Rulemaking
Preparer Tax Identification
Number (PTIN) User Fee
Update
REG-108673-25
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: In the Rules and Regulations
section of this issue of the Federal Regis-
ter, the Department of the Treasury (Trea-
sury Department) and the IRS are issuing
interim final regulations that amend the
current regulations to reduce from $11 to
$10 the amount of the user fee imposed on
tax return preparers to apply for or renew a
preparer tax identification number (PTIN).
DATES: Electronic or written comments
and requests for a public hearing must be
received by October 30, 2025.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-108673-25) by following
the online instructions for submitting
comments. Requests for a public hearing
must be submitted as prescribed in the
“Comments and Requests for a Public
Hearing” section. Once submitted to the
Federal eRulemaking Portal, comments
cannot be edited or withdrawn. The Trea-
sury Department and the IRS will pub-
lish for public availability any comments
submitted to the IRS’s public docket.
Send paper submissions to: CC:PA:01:PR
(REG-108673-25), Room 5203, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Jamie Song at (202) 317-
6845; concerning cost methodology, Maria
E. Arias-Buchanan at (202) 803-9569;
concerning submissions of comments or
requests for a public hearing, the Publica-
tions and Regulations Section at (202) 317-
6901 (not toll-free numbers) or by email at
publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
Interim final regulations in the Rules
and Regulations section of this issue of the
Federal Register amend regulations under
26 CFR part 300 setting a user fee for indi-
viduals who apply for or renew a PTIN.
The Independent Offices Appropriation
Act of 1952 (IOAA), which is codified at
31 U.S.C. 9701, authorizes agencies to pre-
scribe regulations that establish user fees for
services provided by the agency. The IOAA
provides that regulations implementing user
fees are subject to policies prescribed by the
President; these policies are set forth in the
Office of Management and Budget Circular
A-25, 58 FR 38142 (July 15, 1993).
The text of the interim final regulations
also serves as the text of these proposed
regulations. The preamble to the interim
final regulations explains the interim final
regulations and these proposed regulations.
Special Analyses
I. Regulatory Planning and Review
These proposed regulations are not
subject to review under section 6(b) of
Executive Order 12866 pursuant to the
Memorandum of Agreement (July 4,
2025) between the Treasury Department
and the Office of Management and Budget
regarding review of tax regulations.
II. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby cer-
tified that these proposed regulations will
not have a significant economic impact
on a substantial number of small entities.
These proposed regulations affect individ-
uals who prepare or assist in preparing all
or substantially all of a tax return or claim
for refund for compensation. Only indi-
viduals, not businesses, can have a PTIN.
Thus, the economic impact of these regula-
tions on any small entity generally will be
a result of an individual tax return preparer
who is required to have a PTIN owning a
small business or a small business other-
wise employing an individual tax return
preparer who is required to have a PTIN.
The Treasury Department and the IRS esti-
mate that approximately 915,437, 942,900,
and 971,187 individuals will apply annu-
ally for an initial or renewal PTIN in fiscal
years 2026, 2027, and 2028, respectively.
Although the interim final regulations will
likely affect a substantial number of small
entities, the economic impact on those
entities is not significant. The interim final
regulations will establish a $10 user fee per
application or renewal (plus $8.75 payable
directly to the contractor), which is a reduc-
tion from the previously established user
fee and will not have a significant economic
impact on a small entity. Accordingly, the
Secretary of the Treasury (or the Secretary’s
delegate) certifies that the rule will not have
a significant economic impact on a substan-
tial number of small entities, and a regula-
tory flexibility analysis is not required.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires that
agencies assess anticipated costs and ben-
efits and take certain other actions before
issuing a final rule that includes any Fed-
eral mandate that may result in expendi-
tures in any one year by a State, local, or
Tribal government, in the aggregate, or by
the private sector, of $100 million in 1995
dollars, updated annually for inflation. This
rule does not include any Federal mandate
that may result in expenditures by State,
local, or Tribal governments, or by the pri-
vate sector in excess of that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-

Bulletin No. 2025–42 495 October 14, 2025
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Execu-
tive order. These proposed regulations do
not have federalism implications and do
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
V. Submission to Small Business
Administration
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, this notice of proposed
rulemaking has been submitted to the
Chief Counsel of the Office of Advocacy
of the Small Business Administration for
comment on its impact on small business.
Comments and Requests for a Public
Hearing
Consideration will be given to com-
ments that are submitted timely to the
IRS as prescribed in this preamble under
the ADDRESSES heading. The Treasury
Department and the IRS request com-
ments on all aspects of the proposed reg-
ulations. Any comments submitted will
be made available at https://www.regula-
tions.gov or upon request.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a public hearing are
also encouraged to be made electronically.
If a public hearing is scheduled, notice of
the date and time for the public hearing
will be published in the Federal Register.
Drafting Information
The principal author of these regula-
tions is Jamie Song, Office of the Asso-
ciate Chief Counsel (Procedure and
Administration). Other personnel from
the Treasury Department and the IRS par-
ticipated in the development of the regu-
lations.
List of Subjects in 26 CFR Part 300
Estate taxes, Excise taxes, Fees, Gift
taxes, Income taxes, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and IRS propose to amend 26 CFR part
300 as follows:
PART 300—USER FEES
Paragraph 1. The authority citation
for part 300 continues to read as follows:
Authority: 31 U.S.C. 9701.
Par. 2. Section 300.11 is amended by
revising paragraphs (b) and (d) to read as
follows:
§300.11 Fee for obtaining a preparer
tax identification number.
* * * * *
(b) [The text of proposed § 300.11(b) is
the same as the text of § 300.11(b) in the
interim final rule published elsewhere in
this issue of the Federal Register].
* * * * *
(d) [The text of proposed § 300.11(d) is
the same as the text of § 300.11(d) in the
interim final rule published elsewhere in
this issue of the Federal Register].
Edward T. Killen,
Acting Chief Tax Compliance Officer.
(Filed by the Office of the Federal Register September
29, 2025, 8:45 a.m., and published in the issue of the
Federal Register for September 30, 2025, 90 FR 46777)
Notice of Proposed
Rulemaking
Occupations that
Customarily and Regularly
Received Tips; Definition of
Qualified Tips
REG-110032-25
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and public hearing.
SUMMARY: This document contains
proposed regulations that identify occu-
pations that customarily and regularly
received tips on or before December 31,
2024, and provide a definition of “quali-
fied tips” for purposes of the income tax
deduction for qualified tips. These pro-
posed regulations affect individuals who
receive tips as part of their occupation.
DATES: Written or electronic comments
must be received by October 22, 2025. The
public hearing is being held on October
23, 2025, at 10 a.m. Eastern Time (ET).
Requests to speak and outlines of topics to
be discussed at the public hearing must be
received by October 22, 2025. If no outlines
are received by October 22, 2025, the pub-
lic hearing will be cancelled. Requests to
attend the public hearing must be received
by 5 p.m. ET on October 21, 2025.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal eRulemaking
Portal at https://www.regulations.gov (indi-
cate IRS and REG-110032-25) by follow-
ing the online instructions for submitting
comments. Requests for a public hearing
must be submitted as prescribed in the
“Comments and Public Hearing” section.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn. The Department of the Trea-
sury (Treasury Department) and the IRS
will publish for public availability any com-
ments submitted to the IRS’s public docket.
Send paper submissions to: CC:PA:01:PR
(REG-110032-25), Room 5203, Inter-
nal Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
FOR FUTHER INFORMATION
CONTACT: Concerning these proposed
regulations, Stephanie Caden or Andrew
Holubeck at (202) 317-4774; concerning
submission of comments or the public
hearing, please contact Publications and
Regulations Section at (202) 317-6901
(not toll-free numbers) or by email at pub-
lichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Authority
This notice of proposed rulemak-
ing contains proposed amendments that
would add new regulations to the Income

October 14, 2025 496 Bulletin No. 2025–42
Tax Regulations (26 CFR part 1) under
section 224 of the Internal Revenue Code
(Code) related to the deduction for qual-
ified tips. The proposed regulations are
issued under the authority conferred by
section 70201(h) of Public Law 119-21,
139 Stat. 72 (July 4, 2025), commonly
known as the One, Big, Beautiful Bill Act
(OBBBA), which requires that, not later
than 90 days after the date of the enact-
ment of the OBBBA, the Secretary of
the Treasury or the Secretary’s delegate
(Secretary) publish a list of occupations
that customarily and regularly received
tips on or before December 31, 2024, for
purposes of section 224(d)(1) of the Code.
The proposed regulations are also issued
under the authority in section 224(d)(2)
(C), which provides that “qualified tips”
do not include any amount received by an
individual unless such other requirements
as may be established by the Secretary in
regulations or other guidance are satisfied,
and section 224(g) of the Code, which
instructs the Secretary to prescribe such
regulations or other guidance as may be
necessary to prevent reclassification of
income as qualified tips, including regu-
lations or other guidance to prevent abuse
of the deduction allowed by section 224.
In addition, the proposed regulations are
also issued under the authority of section
7805(a) of the Code, which authorizes the
Secretary to prescribe all needful rules
and regulations for the enforcement of
the Code, including all rules and regula-
tions as may be necessary by reason of
any alteration of law in relation to internal
revenue.
Background
Under section 61(a), amounts received
by individuals as tips are included in gross
income and subject to income tax. Trea-
sury regulations under section 61 provide
that “[w]ages, salaries...[and] tips... are
income to the recipients unless excluded
by law.” See § 1.61-2(a).
1

Section 63(a) defines taxable income
as gross income minus allowable deduc-
tions (other than the standard deduction).
Section 63(b) provides that, in the case of
an individual who does not elect to item-
ize deductions for the taxable year, tax-
able income means adjusted gross income
reduced by the standard deduction and
certain other enumerated deductions.
Section 70201(a) of the OBBBA added
new section 224 to the Code providing an
income tax deduction for “qualified tips”
that are received during the taxable year
by individuals in an occupation that cus-
tomarily and regularly received tips on
or before December 31, 2024. Section
70201(b) of the OBBBA added the deduc-
tion provided by section 224 to the list
of deductions used to determine taxable
income in section 63(b). Specifically, sec-
tion 224(a) provides for a deduction in an
amount equal to the qualified tips received
by an individual in a taxable year that are
included on statements
2
furnished to the
individual pursuant to section 6041(d)(3),
section 6041A(e)(3), section 6050W(f)
(2), or section 6051(a)(18), or are reported
by the taxpayer on Form 4137 (or succes-
sor). Section 224(b)(1) limits this deduc-
tion to an amount not to exceed $25,000
in a taxable year. Section 224(b)(2) fur-
ther limits the amount of the deduction
based on a taxpayer’s modified adjusted
gross income, which is a taxpayer’s
adjusted gross income for the taxable year
increased by any amount excluded from
gross income under section 911, section
931, or section 933. The deduction phases
out for taxpayers with modified adjusted
gross income over $150,000 ($300,000
for joint filers).
Section 224(c) provides that, in the case
of qualified tips received by an individual
during any taxable year in the course of
a trade or business (other than the trade
or business of performing services as an
employee) of such individual, such qual-
ified tips are taken into account under
section 224(a) only to the extent that the
gross income for the taxpayer from such
trade or business for such taxable year
(including such qualified tips) exceeds
the sum of the deductions allocable to the
trade or business in which such qualified
tips are received by the individual for such
taxable year.
Section 224(d)(1) defines “qualified
tips” as cash tips received by an indi-
vidual in an occupation that customarily
and regularly received tips on or before
December 31, 2024, as provided by the
Secretary. Section 224(d)(2) further
requires that qualified tips not include any
amount received by an individual unless
the amount:
• Is paid voluntarily without any conse-
quence in the event of nonpayment, is
not the subject of negotiation, and is
determined by the payor;
• Is not received in the course of a trade
or business that is a specified service
trade or business as defined in section
199A(d)(2) of the Code; and
• Satisfies such other requirements as
may be established by the Secretary
in regulations or other guidance.
Section 224(d)(2) further provides
that, for purposes of determining whether
amounts received in the course of a trade
or business is a specified trade or business
as defined in section 199A(d)(2), in the
case of an individual receiving tips in the
trade or business of performing services
as an employee, such individual is treated
as receiving tips in the course of a trade or
business which is a specified service trade
or business if the trade or business of the
employer is a specified service trade or
business.
Section 224(d)(3) provides that for pur-
poses of section 224(d)(1), the term “cash
tips” includes tips received from custom-
ers that are paid in cash or charged and,
in the case of an employee, tips received
under any tip-sharing arrangement.
Section 224(e) provides that no deduc-
tion is allowed under section 224 unless
the taxpayer includes on the return of
tax for the taxable year such individual’s
Social Security number (SSN) as defined
in section 24(h)(7) of the Code.
Section 224(f) provides that if the tax-
payer is a married individual (within the
meaning of section 7703), section 224
1
Under section 3121(q), tips are also considered wages for Federal Insurance Contributions Act (FICA) purposes. However, the deduction under section 224 does not apply for FICA purposes
and is not taken into account in determining wages subject to FICA tax. Similarly, the deduction under section 224 does not apply for Self-Employment Contributions Act (SECA) purposes
and is not taken into account for purposes of determining net earnings subject to SECA tax.
2
The House Budget Committee report on the OBBBA, H. Rept. 119-106, at 1503 (2025), specifies that the qualified tip amounts included on reporting statements (for example, Form 1099)
must be separately accounted for on the statements.

Bulletin No. 2025–42 497 October 14, 2025
applies only if the taxpayer and the tax-
payer’s spouse file a joint return for the
taxable year. That is, the deduction is not
available for a taxpayer who is married
and files separately.
Section 224(h) provides that no deduc-
tion is allowed under section 224 for any
taxable year beginning after December 31,
2028.
Section 70201(h) of the OBBBA
instructs the Secretary to publish a list of
occupations that customarily and regu-
larly received tips on or before December
31, 2024, for purposes of section 224(d)
(1) no later than 90 days after the date the
OBBBA was enacted (July 4, 2025).
The Council of Economic Advisors
(CEA) released a report in June 2025, enti-
tled “The One Big Beautifull Bill: Legis-
lation for Historic Prosperity and Deficit
Reduction,” that estimates the economic
effects and fiscal impacts of OBBBA. In
this report CEA estimates that the no tax
on tips provision of OBBBA will increase
average take-home pay for tipped workers
by $1,300 per year. CEA also estimates
that the provisions for no tax on overtime,
no tax on tips, and senior tax relief will
boost Gross Domestic Product by 0.3 to
0.4 percent while they are in effect and the
growth that they generate will yield $54 to
$73 billion in higher revenue to offset the
direct revenue losses attributable to these
provisions.
Explanation of Provisions
1. Qualified tips
Section 224(d)(1) defines “qualified
tips” as cash tips received by an indi-
vidual in an occupation that customarily
and regularly received tips on or before
December 31, 2024, as provided by the
Secretary. Consistent with section 224(d),
the proposed regulations would define
“qualified tips” as amounts received as
cash tips by an individual in an occu-
pation that customarily and regularly
received tips on or before December 31,
2024, subject to certain limitations. The
proposed regulations would define cash
tips as tips received from customers or, in
the case of an employee, through a man-
datory or voluntary tip-sharing arrange-
ment, such as a tip pool, that are paid in
a cash medium of exchange, including
by cash, check, credit card, debit card,
gift card, tangible or intangible tokens
that are readily exchangeable for a fixed
amount in cash (such as casino chips), and
any other form of electronic settlement
or mobile payment application that is
denominated in cash. Cash tips would not
include items paid in any medium other
than cash or charge, such as event tickets,
meals, services, or other assets that are
not exchangeable for a fixed amount in
cash (such as most digital assets). For pur-
poses of these proposed regulations, tips
would be amounts paid by customers for
services that are in excess of the amount
agreed to, required, charged, or otherwise
reasonably expected to have to be paid for
the services in an arm’s length transac-
tion. These definitions are consistent with
IRS guidance defining tips for FICA and
income tax withholding purposes in §§
31.3121(a)(12)-1 and 31.3401(a)(16)-1,
as well as other IRS guidance concerning
tips in Notice 2023-13, 2023-9 I.R.B. 534,
and Rev. Rul. 2012-18, 2012-26 I.R.B.
1032.
A. Payments must be voluntary
Section 224(d)(2)(A) provides that
“qualified tips” must be paid voluntarily
without any consequence in the event of
nonpayment, must not be the subject of
negotiation, and must be determined by
the payor. In Revenue Ruling 2012-18, the
IRS applied similar factors in distinguish-
ing tips from non-tip wages, specifically
service charges, for FICA and income tax
withholding purposes. Revenue Ruling
2012-18 provides that the absence of any
of the following factors creates a doubt
as to whether a payment is a tip and indi-
cates that the payment may be a service
charge: (1) the payment must be made free
from compulsion, (2) the customer must
have the unrestricted right to determine
the amount, (3) the payment should not
be the subject of negotiation or dictated
by employer policy, and (4) generally,
the customer has the right to determine
who receives the payment. See also Ann.
2012-25, 2012-26 I.R.B. 1058; Rev. Rul.
59-252, 1059-2 C.B. 215. Example A in
Revenue Ruling 2012-18 concludes that
an 18% charge automatically added to a
bill for a large party is a service charge
and not a tip because it was dictated by
the employer and was not paid free from
compulsion. Consistent with both exist-
ing IRS guidance on tips and evolving
practices concerning service charges, the
proposed regulations would clarify that
service charges, automatic gratuities, and
other mandatory amounts automatically
added to a customer’s bill by the vendor
or establishment, are not qualified tips
for purposes of section 224(d) unless the
customer is expressly provided an option
to disregard or modify it without conse-
quence.
B. Special rules regarding a specified
service trade or business
Section 224(d)(2)(B) provides that
qualified tips do not include those received
in the course of a trade or business that
is a specified service trade or business
(SSTB) as defined in section 199A(d)
(2). Under section 199A(d)(2), an SSTB
is defined as any trade or business (A)
involving the performance of services in
the fields of health, law, accounting, actu-
arial science, performing arts, consulting,
athletics, financial services, brokerage ser-
vices, or any trade or business where the
principal asset of such trade or business
is the reputation or skill of one or more
of its employees or owners, or (B) that
involves the performance of services that
consist of investing and investment man-
agement, trading, or dealing in securities
(as defined in section 475(c)(2)), partner-
ship interests, or commodities (as defined
in section 475(e)(2)).
3
Treasury regula-
tions in § 1.199A-5(b)(2) further define
what it means to perform services in the
fields listed in section 199A(d)(2)(A). For
example, § 1.199A-5(b)(2)(vi) provides,
in part, that the meaning of services per-
formed in the performing arts means “the
performance of services by individuals
who participate in the creation of per-
forming arts, such as actors, singers, musi-
cians, entertainers, directors, and similar
professionals performing services in their
capacity as such.” The regulations further
provide that, ‘[t]he performance of ser-
3
Section 199A(d)(2) cross references the qualified trade or business definition in section 1202(e)(3)(A), with certain modifications.

October 14, 2025 498 Bulletin No. 2025–42
vices in the field of performing arts does
not include the provision of services that
do not require skills unique to the creation
of performing arts, such as the mainte-
nance and operation of equipment or facil-
ities for use in the performing arts. . . . [or
the] provision of services by persons who
broadcast or otherwise disseminate video
or audio of performing arts to the public.”
The proposed regulations would provide
that an amount received by an individual
in the course of an SSTB (as defined in
section 199A(d)(2) and § 1.199A-5(b)) is
not a qualified tip. The Treasury Depart-
ment and the IRS request comments on
the application of the existing rules under
§ 1.199A-5(b) to the SSTB definition in
section 224. Specifically, comments are
requested concerning whether the defini-
tions in §1.199A-5(b) should be refined
for section 224 purposes.
Consistent with the flush language in
section 224(d)(2), the proposed regula-
tions would also provide that tips received
by an employee performing services for
the employee’s employer in the course
of a specified service trade or business
operated by the employer are not qualified
tips. The proposed regulations would clar-
ify that this rule applies without regard to
whether an owner of the trade or business
is able to claim a section 199A deduc-
tion. For example, this rule applies if the
employer is a corporation, even though
corporations are not eligible for the deduc-
tion under section 199A.
The proposed regulations would also
clarify that this rule applies even if the
employee receiving tips in the course of
working for an SSTB employer is working
in an occupation that customarily and reg-
ularly received tips on or before December
31, 2024, for purposes of section 224(d)
(1) and is listed in proposed § 1.224-1(f).
The proposed regulations would provide
examples illustrating this rule.
C. Determining qualified tips for
employees who participate in voluntary
tip reporting programs with tip rates
Employees who enter into a Tipped
Employee Participation Agreement as part
of the Tip Rate Determination Agreement
(TRDA) program or a Model Gaming
Employee Tip Reporting Agreement as
part of the Gaming Industry Tip Com-
pliance Agreement (GITCA) program
agree to report tips to their employer at
or above the tip rate established by their
employer for their occupational category.
In exchange for the employees’ voluntary
agreement to report tips at this agreed
upon rate, the IRS provides tip examina-
tion protection to the employees for the
taxable years in which their agreements
were in effect. The proposed regulations
would clarify that “qualified tips” include
tips reported pursuant to an agreement
under the TRDA or GITCA program
provided that the participating employee
in the TRDA or GITCA program is oth-
erwise eligible for the deduction under
section 224, and reports tips using the tip
rates established under their agreement.
Additionally, the proposed regulations
would clarify that an employee participat-
ing in the TRDA or GITCA program may
report additional qualified tips to the IRS
on the Form 4137.
D. Other requirements
Section 224(d)(2) provides that the
term “qualified tips” does not include
amounts received by an individual unless
such other requirements as may be estab-
lished by the Secretary in regulations or
other guidance are satisfied. The proposed
regulations would provide that amounts
received for services the performance of
which is a felony or misdemeanor under
applicable law are not qualified tips. In
addition, the proposed regulations would
provide that amounts received for prosti-
tution services and pornographic activity
are not qualified tips. Finally, to prevent
reclassification of income as qualified tips,
and to prevent abuse of the deduction, the
proposed regulations would also provide
that a payment is not a qualified tip if the
tip recipient has an ownership interest in
or is employed by the payor of the tip.
2. Trade or business limitations
Section 224(c) imposes a limitation on
a taxpayer who receives tips in the course
of a trade or business (other than the trade
or business of performing services as an
employee). The proposed regulations
would restate the statutory limit, which is
the difference between the gross income
from the taxpayer’s trade or business for
the taxable year minus the sum of deduc-
tions (other than the deduction for quali-
fied tips) for that trade or business for the
taxable year. The proposed regulations
would clarify that the deduction allowed
for qualified tips is not taken into account
for this purpose because it is not a deduc-
tion associated with a trade or business.
3. Social Security numbers and married
individuals
The proposed regulations would clar-
ify that a taxpayer must include on the
tax return for the taxable year the SSN,
within the meaning of section 24(h)(7),
of the individual who has received the
tips. The proposed regulations would
also restate the statutory requirement
that a taxpayer who is married, within
the meaning of section 7703, must file a
joint return with the taxpayer’s spouse to
claim the deduction allowed by section
224. The proposed regulations would
further clarify that married taxpayers are
only required to include the SSN of the
taxpayer who has received the qualified
tips to claim the deduction, and that an
SSN is required of both taxpayers only
when both have qualified tips for which
they are claiming a deduction.
The proposed regulations would also
clarify that the total amount of qualified
tips that can be deducted on a return per
calendar year is $25,000 regardless of fil-
ing status. After applying the $25,000 lim-
itation, the proposed regulations would
provide that the amount is subject to the
phase-out based on the taxpayers’ modi-
fied adjusted gross income described in
section 224(b)(2).
4. Occupations that customarily and
regularly received tips on or before
December 31, 2024
Under section 224(d)(1), “qualified
tips” are cash tips received by an indi-
vidual in an occupation that customarily
and regularly received tips on or before
December 31, 2024, as provided by the
Secretary. In addition, section 70201(h)
of the OBBBA instructs the Secretary
to publish a list of occupations that cus-
tomarily and regularly received tips on or
before December 31, 2024, for purposes
of section 224(d)(1).

Bulletin No. 2025–42 499 October 14, 2025
A. Methodology
The Treasury Department and the IRS
drafted the proposed list of occupations
that customarily and regularly received
tips based on a review of IRS data, leg-
islative history, and survey data regarding
tipped occupations and the presence of
certain factors demonstrating that those
occupations customarily and regularly
received tips. Because the Code does not
define the phrase “customarily and regu-
larly” regarding tips,
4
the Treasury Depart-
ment and the IRS looked to dictionary
definitions and other statutory provisions
for guidance. The Oxford English dictio-
nary defines the term “customarily” as
“[i]n a way that follows customs or usual
practices; according to custom; usually;
habitually.”
5
It defines “regularly” as “in
conformity to a general rule or established
principle; in a steady, predictable, or uni-
form manner; at fixed times or uniform
intervals; repeatedly, without interruption;
frequently, often.”
6

The Fair Labor Standards Act (FLSA)
uses the phrase “customarily and regu-
larly” in relation to the FLSA tip credit.
7

The FLSA defines a “tipped employee”
for whom an employer may take a tip
credit as “any employee engaged in an
occupation in which he customarily and
regularly receives more than $30 a month
in tips.” 29 U.S.C. 203(t). The FLSA fur-
ther provides that when an employer takes
an FLSA tip credit for a tipped employee,
the tipped employee must retain all of the
tips the employee receives, except that
this requirement “shall not be construed
to prohibit the pooling of tips among
employees who customarily and regu-
larly receive tips.” 29 U.S.C. 203(m)(2)
(A).
8
United States Department of Labor
(DOL) regulations provide, in part, that
“[t]he phrase ‘customarily and regularly’
signifies a frequency which must be
greater than occasional, but which may
be less than constant.” 29. CFR 531.57.
9

DOL guidance also addresses specific
occupations in which employees custom-
arily and regularly receive tips within the
meaning of the FLSA. For instance, DOL
guidance interpreting the FLSA states that
servers, counter personnel who serve cus-
tomers, bellhops, bussers (that is, server
helpers), and service bartenders are exam-
ples of occupations that “customarily and
regularly receive tips” for purposes of
the FLSA.
10
In guidance, and in opinion
letters based on specific factual scenarios
presented, DOL’s Wage and Hour Division
(WHD) has looked to the FLSA’s statu-
tory text, its legislative history, and the
extent to which employees in the occupa-
tion interact with customers to determine
whether an employee customarily and
regularly receives tips for purposes of the
FLSA. Courts similarly have considered
whether an employee is in an occupation
that customarily and regularly receives
tips for purposes of the FLSA.
11
Based on
these definitions and the guidance under
the FLSA, the Treasury Department and
the IRS determined that individuals must
have received cash tips more often than
occasionally (for example, not only on
annual holidays or other celebrations)
during a calendar year ending on or before
December 31, 2024, in order for the occu-
pation to be an occupation that customar-
ily and regularly received tips on or before
December 31, 2024.
With these parameters in mind,
the Treasury Department and the IRS
reviewed data collected from 2023 Forms
W-2, Wage and Tax Statement,
12
and
Forms 4137, Social Security and Medi-
care Tax on Unreported Tip Income, and
corresponding income tax returns (Forms
1040) that reported tips in box 7 of Form
W-2 (Social Security tips) or on Line 4
of an attached Form 4137. The Treasury
Department and the IRS identified occu-
pations listed on income tax returns (as
reported on page 2 of Form 1040 next
to the taxpayer’s signature) as having
customarily and regularly received tips,
based on the percentage of wage earners
who reported a given occupation in the tax
4
The Code does use the term “customarily” in section 6053(c)(3). Section 6053(c)(3) requires large food or beverage establishments to allocate tips among “employees performing services
during any payroll period who customarily receive tip income.” Section 6053(c)(4) defines the term “large food or beverage establishment” as a trade or business “with respect to which
the tipping of employees serving food or beverages by customers is customary.” Regulations under section 6053(c) provide further guidance concerning the term “customary.” Section
31.6053-3(j)(6) excludes “fast food” operation from the definition of “food or beverage operation.” Section 31.6053-3(j)(7) provides that, for purposes of defining “large food or beverage
establishments,” tipping would not be considered customary for a cafeteria style operation or for a food or beverage operation where at least 95% of its total sales are nonallocable receipts
(defined as carryout sales and sales with service charges). A “cafeteria style operation” is defined in § 31.6053-3(j)(18) as a food or beverage operation which is primarily self-service and
in which the total cost of food or beverages selected by a customer is paid prior to the customer’s being seated or is stated on a check provided to the customer prior to the customer’s being
seated and is paid by the customer to a cashier.
5
Oxford University Press. (n.d.). Customarily, adv. In Oxford English dictionary. Retrieved July 31, 2025, from https://doi.org/10.1093/OED/1071895970.
6
Oxford University Press. (n.d.). Regularly, adv., 1.a. In Oxford English dictionary. Retrieved July 31, 2025, from https://doi.org/10.1093/OED/1195323874.
7
Under the FLSA, employers take a tip credit of up to $5.12 per hour to bring an employee’s total earnings up to the Federal minimum wage amount. See 29 USC 203(m)(2)(A)(i)-(ii); see
also Fair Labor Standards Amendments of 1989, Pub. L. 101–157, § 5, 103 Stat. 938, 941 (1989) (requiring employers to pay directly at least “50 percent of the [$4.25 per hour] minimum
wage rate after March 31,1991”).
8
The FLSA’s tip credit has several components, including that an employee must be in an occupation in which the employee customarily and regularly receives at least a certain amount per
month in tips (more than $30), retains all tips (except for a pool limited to employees who customarily and regularly receive tips), receives other direct wages, and receives advance notice to
qualify as a “tipped employee” for whom an employer may take a tip credit against its minimum wage obligations. See 29 U.S.C. 203(m)(2)(A), (t).
9
The regulations also provide that “if an employee is in an occupation in which he normally and recurrently receives more than $30 a month in tips, he will be considered a tipped employee
even though occasionally because of sickness, vacation, seasonal fluctuations or the like, he fails to receive more than $30 in tips in a particular month.” 29 CFR 531.57.
10
See DOL Field Operation Handbook, §30d08. Retrieved August 19, 2025, from https://www.dol.gov/agencies/whd/field-operations-handbook; see also WHD Opinion Letter FLSA2009-12
(Jan. 15, 2009); WHD Opinion Letter FLSA2008-18 (Dec. 19, 2008); and WHD Opinion Letter FLSA-858 (June 28, 1985) (concluding that barbacks, itamae-sushi and teppanyaki chefs, and
a “wine-server/captain-host,” respectively, could be included in a tip pool with tipped employees for whom the employer took a tip credit)..
11
See, e.g., Wai Man Tom v. Hosp. Ventures LLC, 980 F.3d 1027, 1040 (4th Cir. 2020); Montano v. Montrose Rest. Assocs., Inc., 800 F.3d 186, 191 (5th Cir. 2015) (finding that “[t]he common
thread of the cases and the DOL opinion letters is to require a tipped employee to have more than a de minimis interaction with the customers who leave the undesignated tips” for purposes of
the FLSA tip credit.); Myers v. Copper Cellar Corp., 192 F.3d 546, 550-51 (6th Cir. 1999); Kilgore v. Outback Steakhouse of Fla., Inc., 160 F.3d 294, 301 (6th Cir. 1998) (noting that restaurant
hosts “sufficiently interact with customers in an industry where undesignated tips are common.”).
12
Section 224(d)(1) specifies that the occupation must have customarily and regularly received tips on or before December 31, 2024. The Treasury Department and the IRS reviewed data for
the 2023 tax year because that was the most recent year for which comprehensive income tax return data was available. The Treasury Department and the IRS compared the 2023 tax year
data to similar data for 2017-2022. Because 2023 data was similar to prior year data, the Treasury Department and the IRS have reviewed preliminary data for the 2024 tax year and anticipate
that final 2024 data will be substantially similar to 2023 data.

October 14, 2025 500 Bulletin No. 2025–42
return data and also reported at least $100
in annual tipped income.
The Treasury Department and the IRS
next determined that the data was subject
to limitations that resulted in under-in-
clusion because the data was limited to
the tax return data of individuals who
reported tips to employers and received a
Form W-2 or who filed Form 4137. Indi-
viduals working in certain occupations,
such as rideshare drivers, receive tips but
may operate as independent contractors
rather than employees, and therefore do
not receive a Form W-2 reporting tips, nor
do they separately report their tip income
for income tax purposes.
13
Because tips
were not separately reported on Forms
1099-NEC, Nonemployee Compensation,
1099-MISC, Miscellaneous Information,
or 1099-K, Payment Card and Third Party
Network Transactions, certain occupa-
tions that received tips were not reflected
in the income tax return data. In addi-
tion, the Treasury Department and IRS
determined that the data may have been
overinclusive due to variations in how
taxpayers chose to write their occupation
on Form 1040. For example, the self-re-
ported occupation may have typographi-
cal errors or abbreviations, or taxpayers
may have written multiple occupations on
their Form 1040, separated by a comma
or a slash mark (like “Occupation 1/Occu-
pation 2”).
14
These variations in how tax-
payers reported their occupation on Form
1040 made it difficult for the data analy-
sis to capture all taxpayers with a given
occupation (in the sense of what job they
actually performed, rather than what they
wrote on the Form 1040) together. This
was particularly problematic for certain
occupations that had more variations in
how they were reported (for example,
server, waitstaff, waitress, waiter).
To account for these limitations, the
Treasury Department and the IRS exam-
ined occupations identified in the GITCA
program, a voluntary tip reporting pro-
gram for the gaming industry run by the
IRS, and other similar IRS tip reporting
programs as occupations that received tips
on or before December 31, 2024. See Rev.
Proc. 2007-32, 2007-22 I.R.B. 1322.
15
The
IRS has been collecting tip data through
its GITCA program (and other voluntary
tip reporting programs) for over 20 years.
The GITCA program requires participat-
ing employers to provide annual reports to
the IRS that contain information regard-
ing employees’ occupational categories,
shifts, and outlets; gross receipts subject
to food and beverage tipping; and aggre-
gated receipts showing charged tips and
reported tips. The occupations identi-
fied as having customarily and regularly
received tips based on the GITCA data
were largely consistent with those identi-
fied by the confidential tax return data.
The Treasury Department and the IRS
also consulted the House Budget Com-
mittee report on the OBBBA, H. Rept.
119-106, at 1502 (2025), for additional
information regarding occupations that
traditionally and customarily received
tips on or before December 31, 2024. In
the explanation of the deduction for qual-
ified tips under section 224, the report
describes occupations that traditionally
and customarily received tips on or before
December 31, 2024, as including, but not
limited to, restaurant servers, bartenders,
taxi drivers, rideshare drivers, food deliv-
ery drivers, hairdressers, hairstylists, hotel
bellhops, hotel housekeepers, and casino
dealers.
16
To the extent those occupations
were not already captured by the IRS data,
they were added to the list.
Finally, the Treasury Department and
the IRS examined survey data from the
Panel Study of Income Dynamics that
included information on occupations and
tip income of both employees and self-em-
ployed individuals. The Panel Study of
Income Dynamics is a nationally represen-
tative survey conducted by the University
of Michigan. It includes questions about
the occupation of, and tip income received
by, the reference person and the person’s
spouse (if they are married). The Treasury
Department and the IRS consulted data
from surveys conducted in years 2017,
2019, and 2023 (surveys which inquired
about tips received in 2016, 2018, and
2022, respectively), which is the most
recent data available (except for 2021,
which was avoided due to any potential
abnormalities related to the COVID-19
pandemic). The occupations identified as
having customarily and regularly received
tips based on this survey data were largely
consistent with those identified by the
confidential tax return data.
While reviewing the data, the Treasury
Department and the IRS recognized that
the occupations identified as having cus-
tomarily and regularly received tips on or
before December 31, 2024, were in service
industries, and the individuals working in
the occupations either interacted with the
customers for whom they were providing
a service or, commonly participated in
tip-sharing arrangements with individuals
who interacted with customers.
In defining “cash tips,” section 224(d)
(3) “includes tips received from customers
..., and, in the case of an employee, tips
received under any tip-sharing arrange-
ment.” The Treasury Department and
the IRS considered the language in sec-
tion 224(d)(3) to indicate that, for pur-
poses of the deduction for qualified tips
under section 224, there is no distinc-
tion between employees in occupations
receiving tips directly from customers
and employees in occupations receiving
tips through tip-sharing arrangements
with other employees that interact with
customers. While certain employees in
tip-sharing arrangements may not have
extensive, or any, customer interaction,
they do assist employees who do interact
13
While tip income must be included in the total income that independent contractors report on their income tax returns, independent contractors did not separately report tips on their income
tax returns and payors did not separately report tips to payees on Forms 1099.
14
Taxpayers have a single line to report their occupation on the Form 1040. The 1040 instructions do not address how to report multiple occupations. Some taxpayers reported more than
one occupation. Additionally, some taxpayers with multiple jobs only reported one occupation. When analyzing the tax return data, it was sometimes difficult to determine which occupation
resulted in the receipt of tips. Therefore, the Treasury Department and the IRS limited the main analysis of the tax return data to taxpayers with only one job by limiting the data to taxpayers
who submitted one Form W-2 with their Form 1040, did not file a Schedule C or Schedule F, and reported no active income from a partnership or S corporation on Schedule E.
15
The GITCA program was established by Rev. Proc. 2003-35, 2003-20 I.R.B. 919, and was updated by Rev. Proc. 2007-32 with a new model GITCA. Revenue Procedure 2020-47, 2020-48
I.R.B. 1121 modified Rev. Proc. 2007-32 to provide that the term of a GITCA is generally five years.
16
Initial drafts of the OBBBA legislation contemplated a deduction for tips received by individuals in occupations that traditionally and customarily received tips, but this language was later
revised to refer to occupations that customarily and regularly received tips.

Bulletin No. 2025–42 501 October 14, 2025
with customers or otherwise contribute to
the overall customer experience. For this
reason, the Treasury Department and the
IRS have proposed that certain occupa-
tions that may not involve direct interac-
tions with customers should still be con-
sidered occupations that customarily and
regularly received tips if employees in
such occupations participated in tip-shar-
ing arrangements such as tip pooling or
tip-outs with employees who do interact
with customers. For example, dishwashers
reported receiving sufficient tips to appear
in the IRS data and, even though they do
not typically interact with customers, they
may sometimes participate in tip-shar-
ing arrangements with employees who
do interact with customers (for example,
waitstaff). Accordingly, dishwashers are
included in the proposed list of occu-
pations that customarily and regularly
received tips for purposes of section 224.
The Treasury Department and the IRS
recognize that courts and DOL have inter-
preted the FLSA standard for customarily
and regularly somewhat differently, but
this interpretation is due to differences in
the specific language, purpose, and his-
tory of the FLSA tip credit and mandatory
tip-sharing arrangement provisions. For
instance, the FLSA provides that when an
employer takes a tip credit, the employer
may only require “the pooling of tips
among employees who customarily and
regularly receive tips.” 29 USC 203(m)
(2)(A). This presumes that the employee
has some level of interaction with custom-
ers to “customarily and regularly” receive
tips under the FLSA.
17
In contrast, section
224(d)(3) specifically defines “cash tips”
to include both tips received from custom-
ers and, in the case of an employee, tips
received under any tip-sharing arrange-
ment.
After compiling the list of occupations
that customarily and regularly received
tips, the Treasury Department and the IRS
compared the proposed list of occupations
that customarily and regularly received
tips for purposes of section 224 to occu-
pations contained in the 2018 Standard
Occupation Classification (SOC) code.
The SOC Code system is published by the
Executive Office of the President, Office
of Management and Budget (OMB). The
SOC Code system is a Federal statistical
standard used by Federal agencies to clas-
sify workers into occupational categories
for the purpose of collecting, calculating,
or disseminating data.
18
The SOC Code
system classifies paid work or work for
profit into occupational categories based
on the work performed. All workers are
classified into one of 867 detailed occu-
pations according to their occupational
definition.
19
To facilitate classification,
detailed occupations are combined to form
459 broad occupations, 98 minor groups,
and 23 major groups.
20
Detailed occupa-
tions in the SOC with similar job duties,
and in some cases skills, education, and/or
training, are grouped together. The Trea-
sury Department and the IRS focused on
the detailed occupations in the SOC Code
system. However, in the process of com-
piling this list, the Treasury Department
and the IRS determined that several of the
detailed SOC codes included, in the same
detailed SOC code, some occupations that
customarily and regularly received tips on
or before December 31, 2024, and other
occupations that did not.
21

To address the issue of the over-inclu-
sivity of certain SOC codes, the Treasury
Department and the IRS created a new
categorization system. The descriptions
and illustrative examples for the occupa-
tion codes in this new system often mirror
their SOC code counterparts. However, in
situations where the SOC code was overly
inclusive, the new system provides an
occupation code, description, and illustra-
tive examples that only encompass occu-
pations that customarily and regularly
received tips on or before December 31,
2024.
In addition, in certain situations where
multiple detailed SOC codes described
occupations that had similar titles, the
new system provides an occupation code,
description, and illustrative examples that
stem from multiple detailed SOC codes.
For example, detailed SOC codes for a
variety of chefs and cooks were aggre-
gated in the new system into a single
occupation code.
Lastly, in certain situations, some
detailed SOC codes were split into mul-
tiple occupation codes under the new sys-
tem. For example, chauffeurs were moved
from the SOC occupation “Shuttle Driv-
ers and Chauffeurs” to the “Taxi Driver”
occupation, thus creating under the new
system two occupations: “Taxi and Ride-
share Drivers and Chauffeurs” and “Shut-
tle Drivers.”
B. List of occupations that customarily
and regularly received tips on or before
December 31, 2024.
The proposed regulations would
include the list of occupations that cus-
tomarily and regularly received tips on or
before December 31, 2024 (List of Occu-
pations that Receive Tips), that was com-
piled based on the methodology described
in this preamble. In accordance with stat-
utory language in section 224(d)(1), the
proposed regulations would provide that
only occupations included in the List of
Occupations that Receive Tips are eligible
for the deduction in section 224(a).
This List of Occupations that Receive
Tips would be organized according to the
new categorization system created by the
Treasury Department and the IRS specifi-
cally for this purpose, as described in this
preamble. The specific occupations in the
List of Occupations that Receive Tips,
each assigned a three-digit code called a
17
See Montano v. Montrose Rest. Assocs., Inc., 800 F.3d 186, 189 (5th Cir. 2015) (noting that “[i]t would be circular” to interpret the FLSA to mean that if an employer requires a tipped
employee to give another employee tips, that employee customarily and regularly receives tips for purposes of 29 USC 203(m)(2)(A)’s tip pooling limitation).
18
Office of Management and Budget. (2018). Standard Occupational Classification Manual. U.S. Government Publishing Office. This manual and other related SOC documents can be found
at https://www.bls.gov/soc.
19
Id.
20
Id.
21
For instance, the SOC Code for “Animal Caretakers,” is described in the 2018 SOC Code System as an occupation in which individuals “provide care to promote and maintain the well-being
of pets and other animals that are not raised for consumption.” More specific occupations that would fall under this description include both pet caretakers and zookeepers. Pet caretakers cus-
tomarily and regularly receive tips. Zookeepers, on the other hand, do not. Thus, if the “Animal Caretakers” SOC code were included in the list of occupations that customarily and regularly
receive tips, then zookeepers would become part of the list via their corresponding SOC code, even though they do not customarily and regularly receive tips.

October 14, 2025 502 Bulletin No. 2025–42
“Treasury Tipped Occupation Code” or
“TTOC” would be grouped together in
the following more general occupational
categories:
100s – Beverage and Food Service
200s – Entertainment and Events
300s – Hospitality and Guest Services
400s – Home Services
500s – Personal Services
600s – Personal Appearance and Wellness
700s – Recreation and Instruction
800s – Transportation and Delivery
The List of Occupations that Receive
Tips also provides the “TTOC Occupa-
tion Title” for each occupation code, a
short description of the types of services
performed by individuals working in an
occupation included in this occupation
code, illustrative examples of specific
occupations that would be included under
the occupation code, and the related SOC
System Code(s).
Proposed Applicability Dates
These regulations are proposed to
apply for taxable years beginning after
December 31, 2024. Taxpayers may rely
on these proposed regulations for taxable
years beginning after December 31, 2024,
and on or before the date these regulations
are published as final regulations in the
Federal Register, provided that taxpayers
follow these proposed regulations in their
entirety and in a consistent manner.
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Executive Orders 12866 and 13563
direct agencies to assess costs and ben-
efits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs and
benefits, reducing costs, harmonizing
rules, and promoting flexibility.
The proposed regulations have been
designated by the OMB’s Office of Infor-
mation and Regulatory Affairs (OIRA)
as subject to review under Executive
Order 12866 pursuant to the Memoran-
dum of Agreement (MOA, July 4, 2025)
between the Treasury Department and the
Office of Management and Budget regard-
ing review of tax regulations. OIRA has
determined that the proposed rulemaking
is economically significant under section
3(f)(1) of Executive Order 12866 and
subject to review under Executive Order
12866 and section 1(c) of the Memoran-
dum of Agreement. Accordingly, the pro-
posed regulations have been reviewed by
OMB.
Need for Regulation
Section 70201 of Public Law 119-21,
139 Stat. 72 (July 4, 2025), commonly
known as the One, Big, Beautiful Bill Act
(OBBBA), adds new section 224 to the
Internal Revenue Code,
22
which provides
an income tax deduction for “qualified
tips” that are reported on Internal Rev-
enue Service (IRS) returns and various
forms. The statute requires, under section
70201(h) of the OBBBA, that not later
than 90 days after the date of enactment of
OBBBA, the Secretary of the Treasury or
the Secretary’s delegate (Secretary) pub-
lish a list of occupations that customarily
and regularly received tips on or before
December 31, 2024, for purposes of defin-
ing the term “qualified tips” under section
224(d)(1).
The proposed regulations clarify the
definition of “qualified tips” for purposes
of the income tax deduction under section
224. As required by section 70201(h) of
the OBBBA, the proposed regulations
also provide the list of occupations that
customarily and regularly received tips
on or before December 31, 2024 (List of
Occupations that Receive Tips). The pur-
pose of these proposed regulations is to
provide guidance on requirements of sec-
tion 224 to claim the deduction, including
the definition of “cash tips;” determina-
tions of whether the tips received were in
the course of a trade or business which is
a specified service trade or business; the
requirement for the taxpayer to include
on the tax return for the taxable year
such individual’s Social Security number
(SSN); and the requirement that if the tax-
payer is married (within the meaning of
section 7703), section 224 applies only
if the taxpayer and the taxpayer’s spouse
file a joint return for the taxable year. The
proposed regulations also clarify that the
deduction is limited to $25,000, regard-
less of the taxpayer’s filing status, and that
the deduction is reduced based on the tax-
payer’s modified adjusted gross income
for that taxable year after applying the
$25,000 limitation.
I. The Statute and Proposed Regulations
For taxable years beginning after
December 31, 2024, and before January
1, 2029, employees and self-employed
individuals may deduct qualified tips
from their gross income when calculating
their Federal income tax liability. Section
224(d)(1) defines the term “qualified tips”
to mean cash tips received by an indi-
vidual in an occupation that customarily
and regularly received tips on or before
December 31, 2024, as provided by the
Secretary.
Section 224(d)(3) defines the term
“cash tips” for the purposes of section
224(d)(1) to include tips received from
customers that are paid in cash or charged
and, in the case of an employee, tips
received under any tip-sharing arrange-
ment. The proposed regulations clarify
that “cash tips” are amounts received from
customers or, in the case of an employee,
through a mandatory or voluntary tip-shar-
ing arrangement that are paid in a cash
medium of exchange, including by check,
credit card, debit card, gift card, tangi-
ble or intangible tokens that are readily
exchangeable for a fixed amount in cash
(such as casino chips), and any other form
of electronic settlement or mobile pay-
ment application that is denominated in
cash. Cash tips do not include items paid
in any medium other than cash or charge,
such as event tickets, meals, services, or
other assets that are not exchangeable for
a fixed amount in cash (such as most dig-
ital assets).
Section 224(a) allows qualified tips to
be deducted if they are included on Form
22
References to a “section” are to a section of the Internal Revenue Code of 1986, as amended (Code), unless otherwise indicated.

Bulletin No. 2025–42 503 October 14, 2025
W-2, “Wage and Tax Statement;” Form
1099-NEC, “Nonemployee Compen-
sation;” Form 1099-K, “Payment Card
and Third Party Network Transactions;”
Form 1099-MISC, “Miscellaneous Infor-
mation;” or Form 4137, “Social Security
and Medicare Tax on Unreported Tip
Income.” Employees that enter a Tipped
Employee Participation Agreement as
part of the IRS Tip Rate Determination
Agreement (TRDA) program or a Model
Gaming Employee Tip Reporting Agree-
ment as part of the IRS Gaming Industry
Tip Compliance Agreement (GITCA)
program report their tips according to tip
rates established under their agreement
(and these tips are included on Form W-2).
The proposed regulations would clarify
that the term “qualified tips” for employ-
ees participating in the TRDA or GITCA
program includes tips reported using the
tip rates established under their agreement
and additional tips reported on Form 4137.
The proposed regulations clarify that
the section 224(d)(2)(A) term “qualified
tips” only includes amounts that are paid
voluntarily without any consequence in
the event of nonpayment, are not the sub-
ject of negotiation, and are determined
by the payor. The proposed regulations
clarify that the section 224(d)(2)(B) term
“qualified tips” excludes tips received by
an individual who is self-employed in a
specified service trade or business (SSTB)
as defined in section 199A(d)(2) or by
an employee performing services for the
employee’s employer in the course of
an SSTB operated by the employer. The
proposed regulations also clarify that the
term “qualified tips” does not include
tips that were received while performing
a service that is a felony or misdemeanor
under applicable law. (However, “quali-
fied tips” may include tips received for a
service that is legal but while working for
an establishment that violates applicable
law in other respects.) In addition, the pro-
posed regulations provide that amounts
received for prostitution services and
pornographic activity are not included in
the definition of “qualified tips.” The pro-
posed regulations also clarify that a pay-
ment is not considered a “qualified tip” if
the tip recipient has an ownership interest
in or is employed by the payor of the tip.
Section 224(c) limits the deduction for
qualified tips received by a self-employed
individual to the gross income (including
the qualified tips) from the individual’s
trade or business minus the sum of the
individual’s deductions (other than the
deduction for qualified tips) that are allo-
cable to that trade or business. The pro-
posed regulations clarify that the deduc-
tion for qualified tips is not included when
calculating this limit because it is not a
trade or business deduction.
The proposed regulations clarify the
requirement in section 224(e) that tax-
payers must include their SSN (as defined
in section 24(h)(7)) on their tax return
to claim the deduction for qualified tips.
Taxpayers with an Individual Taxpayer
Identification Number (ITIN) rather than
an SSN will not be able to use their tips
to claim the deduction under section 224.
Married taxpayers must include the SSN
of the taxpayer who earned the qualified
tips that are being used to claim the deduc-
tion; if both spouses earned qualified tips
for the deduction, then they must include
the SSNs of both spouses on their tax
return. The proposed regulations clarify
section 224(f), which requires married
individuals (within the meaning of section
7703) to file a joint tax return for the tax-
able year to claim the deduction for qual-
ified tips.
Section 224(b)(1) limits the deduction
for qualified tips for any taxable year to
$25,000. The proposed regulations clar-
ify that this limitation applies regardless
of the taxpayer’s filing status for that tax-
able year. Under section 224(b)(2)(A), the
deduction for qualified tips is reduced (but
not below zero) by $100 for each $1,000
by which the taxpayer’s modified adjusted
gross income (MAGI) exceeds $150,000
($300,000 in the case of a joint return).
Section 224(b)(2)(B) defines “modified
adjusted gross income” for the purposes
of this phaseout as adjusted gross income
of the taxpayer for the taxable year plus
any amount excluded from gross income
under section 911, section 931, or section
933. The proposed regulations clarify that
the phaseout based on MAGI is applied
after applying the $25,000 limit to the
deduction.
The proposed regulations implement
the statutory requirement from section
70201(h) of the OBBBA that the Secre-
tary publish a list of occupations that cus-
tomarily and regularly received tips on
or before December 31, 2024. For each
occupation, the list provides a numeric
Treasury Tipped Occupation Code
(TTOC), an occupation title, a descrip-
tion of the types of services performed
by individuals working in the occupa-
tion, illustrative examples of specific
occupations that would be included, and
the Standard Occupation Classification
(SOC) system code(s) that are related to
the occupation.
II. Baseline
The Treasury Department and the IRS
have assessed the benefits and costs of the
proposed regulations relative to a no-ac-
tion baseline reflecting anticipated Fed-
eral income tax-related behavior in the
absence of these proposed regulations.
III. Affected Entities and Taxpayers
By providing clarity to the statutory
definition of “qualified tips” and publish-
ing the statutorily required list of occu-
pations that customarily and regularly
received tips on or before December 31,
2024, the proposed regulations affect
taxpayers who wish to claim the deduc-
tion for qualified tips on their individual
income tax returns beginning in taxable
year 2025. Using confidential tax return
data, the Treasury Department and the
IRS estimate that, in 2026, more than 10
million returns will have tips reported on
Form W-2, Form 1099-NEC, Form 1099-
K, Form 1099-MISC, or Form 4137.
IV. Economic Effects of the Proposed
Regulations
The Treasury Department and the IRS
analyzed the economic effects of the pro-
posed regulations in enumerating the list
of occupations that customarily and regu-
larly received tips on or before December
31, 2024, the clarification that “qualified
tips” excludes tips received while per-
forming services that are misdemean-
ors or felonies under applicable law, and
the clarification that “qualified tips” for
employees under tip agreements through
the TRDA or GITCA programs include
tips reported using the tip rates established
under their agreement and additional tips
reported on Form 4137. The projected

October 14, 2025 504 Bulletin No. 2025–42
economic costs and benefits of these pro-
posed regulations are small.
i. List of Occupations that Receive Tips
The proposed regulations enumerate
the List of Occupations that Receive Tips,
as described in section 70201(h) of the
OBBBA. Providing this list will provide
clarity for taxpayers who are expected to
receive qualified tips. While these clarifi-
cations will reduce uncertainty, the Trea-
sury Department and the IRS project that
the magnitude of the efficiency gains from
publishing these proposed regulations
would be small.
a. Methodology
To create the List of Occupations that
Receive Tips, the Treasury Department
and the IRS examined confidential income
tax return data from tax year 2023; data
from the GITCA and related programs;
the House Budget Committee report
on the OBBBA, H. Rept. No. 119-106,
at 1502 (2025); guidance and caselaw
related to the U.S. Department of Labor
(DOL) Fair Labor Standards Act (FLSA);
and survey data from the Panel Study of
Income Dynamics (PSID) for years 2017,
2019, and 2023 (which asks about the
occupation of and tip income received
by individuals in 2016, 2018, and 2022,
respectively). Based on prior guidance
under the FLSA, the Treasury Department
and the IRS determined that individuals
must have received cash tips more often
than occasionally (for example, not only
on annual holidays or other celebrations)
during a calendar year ending on or before
December 31, 2024, in order for their
occupation to be considered as having
customarily and regularly received tips on
or before December 31, 2024.
While reviewing the data, the Trea-
sury Department and the IRS recognized
that the occupations identified as having
customarily and regularly received tips
on or before December 31, 2024, were in
the service industry, and the individuals
working in the occupations either inter-
acted with the customers for whom they
were providing a service or commonly
participated in tip-sharing arrangements
with individuals who interacted with cus-
tomers.
The inclusion of occupations that may
not interact with customers but received
tips from tip-sharing arrangements with
individuals who interacted with custom-
ers departs from the interpretation of the
term “customarily and regularly received
tips” that courts and the DOL have used
regarding the FLSA.
23
The prior guid-
ance and court cases related to the FLSA
require that the employee has some level
of interaction with customers in order to
be considered an occupation that cus-
tomarily and regularly receives tips.
24

However, this is due to differences in the
specific language, purpose, and history
of the FLSA tip credit and mandatory
tip-sharing arrangement provisions. For
instance, the FLSA provides that when an
employer takes a tip credit, the employer
may require “the pooling of tips” only
among employees who customarily and
regularly receive tips, 29 USC 203(m)(2)
(A); this presumes that, under the FLSA,
an employee is not customarily and reg-
ularly tipped merely by virtue of receiv-
ing tips from a pool. In contrast, section
224(d)(3) defines “cash tips” to include
both tips receive from customers and, in
the case of an employee, tips received
under any tip-sharing arrangement. As a
result, occupations in which employees
are commonly included in tip-sharing
arrangements would be considered as hav-
ing “customarily and regularly” received
tips for purposes of the deduction for qual-
ified tips under section 224.
After identifying the occupations that
customarily and regularly received tips on
or before December 31, 2024, the Treasury
Department and the IRS created a catego-
rization system to organize and define the
occupations for purposes of the deduction
for qualified tips. Each occupation was
assigned a TTOC code, an occupation
title, a short description of the types of
services performed by individuals work-
ing in the occupation, illustrative exam-
ples of specific occupations that would be
included under the occupation code, and
the related SOC System code(s).
b. Alternative Methods Considered
In addition to the method described
above, the Treasury Department and the
IRS considered two alternative meth-
ods for creating the List of Occupations
that Receive Tips. These alternative
methods were 1) using the SOC Code
System to define occupations and 2)
using only the confidential income tax
return data to identify occupations that
reported tips. These alternative meth-
ods both excluded some occupations
that customarily and regularly received
tips on or before December 31, 2024,
and also included some occupations that
did not in reality customarily and regu-
larly receive tips on or before Decem-
ber 31, 2024. Therefore, the approach
to produce the List of Occupations that
Receive Tips included in these proposed
regulations was selected over the alter-
natives described below.
One of the alternative methods that
the Treasury Department and the IRS
considered to construct the List of Occu-
pations that Receive Tips was to use the
occupation definitions from the SOC sys-
tem.
25
However, the Treasury Department
and the IRS determined that several of
the detailed SOC occupations were not
sufficiently detailed to separate occupa-
tions that should be included on the List
of Occupations that Receive Tips, from
those that should not. For example, the
SOC code for “Animal Caretakers” is
described in the 2018 SOC Code system
as an occupation in which individuals
“provide care to promote and maintain
the well-being of pets and other animals
that are not raised for consumption.” The
specific occupations that are provided as
illustrative examples for this SOC code
include both pet caretakers and zookeep-
ers. Pet caretakers provide a service to
23
See supra, Explanation of Provisions, Sec. 4.A.
24
See Montano v. Montrose Rest. Assocs., Inc., 800 F.3d 186, 189 (5th Cir. 2015) (noting that “[i]t would be circular” to interpret the FLSA to mean that if an employer requires a tipped
employee to give a second employee tips, that second employee customarily and regularly receives tips for purposes of 29 USC 203(m)(2)(A)’s tip pooling limitation).
25
The SOC Code system is published by the Executive Office of the President, Office of Management and Budget. The SOC Code system is a Federal statistical standard used by Federal agen-
cies to classify workers into occupational categories for the purposes of collecting, calculating, or disseminating data. See Office of Management and Budget. (2018). Standard Occupational
Classification Manual. U.S. Government Publishing Office. This manual and other related SOC documents can be found at https://www.bls.gov/soc.

Bulletin No. 2025–42 505 October 14, 2025
individual customers, personally interact
with customers, and commonly receive
tips on a frequent basis. Therefore, they
would be considered an occupation that
customarily and regularly receives tips.
Zookeepers, on the other hand, provide
a service to animals but not directly to
customers. Many, if not most, zookeepers
do not interact with zoo customers, and
zookeepers do not receive tips on a fre-
quent basis. Zookeeper is therefore not an
occupation that customarily and regularly
received tips. Thus, if the “Animal Care-
takers” SOC Code were included in the
list of occupations that customarily and
regularly received tips, then zookeepers
would become part of the list via their cor-
responding SOC Code, even though they
did not customarily and regularly receive
tips. Thus, using the SOC system alone
was not sufficient for creating the List of
Occupations that Receive Tips.
For the method that was selected
instead of using the SOC System, the
Treasury Department and the IRS cre-
ated a new categorization system. The
descriptions and illustrative examples for
the occupation codes in this new system
often mirror their SOC code counterparts,
and it includes the SOC code(s) that are
related to each TTOC occupation. Of the
867 detailed SOC codes in the 2018 SOC
Code System, 77 of these codes are related
to at least one TTOC occupation.
A second alternative method that the
Treasury Department and the IRS consid-
ered was to use only confidential income
tax return data to identify occupations that
customarily and regularly received tips on
or before December 31, 2024. This data
includes reported tips from Form W-2 and
Form 4137 and the occupation that the
taxpayer (the primary filer and, if married
filing jointly, the spouse) self-reports next
to the taxpayer’s signature on Form 1040.
Individuals in some occupations, such as
rideshare drivers, often operate as inde-
pendent contractors rather than employees
and do not receive Form W-2 or file Form
4137 related to their rideshare activity.
Thus, using only the income tax return
data would have omitted these occupa-
tions, even though individuals in such
occupations did in fact regularly and cus-
tomarily receive tips on or before Decem-
ber 31, 2024. In addition, the analysis
of the income tax return data may have
incomplete information on certain occu-
pations due to variations in how taxpayers
choose to self-report their occupation on
Form 1040. For example, the self-reported
occupation may have typographical errors
or abbreviations, or taxpayers may write
multiple occupations separated by a
comma or a slash mark, like “Occupation
1/Occupation 2.”
26
These variations in
how taxpayers reported their occupation
on Form 1040 made it difficult for the data
analysis to capture all taxpayers with a
given occupation (in the sense of what job
they actually performed, rather than what
they wrote on the Form 1040) together.
This was particularly problematic for cer-
tain occupations that have more variations
in how they were reported.
Due to these limitations, the Trea-
sury Department and the IRS rejected
the method of only using the tax return
data to create the List of Occupations
that Receive Tips. Instead, the tax return
data was supplemented with data from the
GITCA and related programs; the House
Budget Committee report on the OBBBA,
H. Rept. No. 119-106, at 1502 (2025);
guidance and caselaw related to the DOL
FLSA; and survey data from the PSID.
c. Statistics on Reported Tip Income in
Tax Return Data
Table A below contains the List of
Occupations that Receive Tips and statis-
tics on their reported tip income. The table
is organized by Treasury Tipped Occupa-
tion Code (TTOC) and contains the TTOC
Occupation Title and the Related Standard
Occupation Classification (SOC) System
Code(s). (As previously described, the
List of Occupations that Receive Tips in
Table 1 of the proposed regulations also
includes descriptions and illustrative
examples of each TTOC occupation.)
Table A summarizes taxpayer information
from Tax Year 2023 on employees who
have a single job, meaning they received
only one Form W-2; did not file Schedule
C, “Profit or Loss from Business (Sole
Proprietorship),” or Schedule F, “Profit
or Loss From Farming;” and did not have
non-passive income from a partnership or
an S-corporation on Schedule E, “Supple-
mental Income and Loss (From rental real
estate, royalties, partnerships, S corpora-
tions, estates, trusts, Real Estate Mortgage
Investment Conduits, etc.).”
27

Table A shows the percentage of indi-
viduals within the Related SOC code(s)
who have at least $100 of tips reported
on Form W-2 or Form 4137. For exam-
ple, 82.8 percent of individuals who had
the SOC code related to the TTOC Occu-
pation Title of “Bartenders” had at least
$100 of tips reported on Form W-2 or
Form 4137.
Table A also shows the amount of
reported tips of individuals in the Related
SOC code(s) as a percentage of all
reported tips. The numerator of the per-
centage is the amount of reported tips of
individuals in the Related SOC code(s)
who had any tips reported on Form W-2
or Form 4137. The denominator is the
amount of reported tips of all individuals,
regardless of whether their occupation
could be mapped to a SOC code or if their
SOC code is related to a TTOC. For exam-
ple, 34.2 percent of all reported tips are
from individuals who had the SOC code
related to the TTOC Occupation Title of
“Wait Staff.”
Lastly, Table A shows reported tips as
a percent of wage compensation for indi-
viduals in Related SOC code(s) who had
reported tips. Wage compensation is the
sum of wages, tips, and other compensa-
tion reported in Box 1 of Form W-2 and
unreported tips from line 4 of Form 4137.
For example, among individuals with
SOC Codes related to the TTOC Occupa-
tion Title of “Gambling Dealers” who had
reported tips on Form W-2 or Form 4137,
reported tips were 70.7 percent of wage
compensation.
26
Taxpayers have a single line to report their occupation on the Form 1040. If they have multiple occupations, they may write the occupation for only one of their jobs or they may write
multiple occupations. However, when analyzing the tax return data, it would be difficult to determine to which job any reported tips should be assigned when a taxpayer has multiple jobs.
Therefore, the Treasury Department and the IRS limited the main analysis of the tax return data to taxpayers with only one job. However, even among this sample, some taxpayers may write
both the occupation from their job and a title for a role where they may not receive income, such as “Student/Occupation.”
27
Since tips are reported separately from other compensation for employees but not for self-employed individuals in the current tax return data, these screening criteria that limit the sample
to employees with a single job were utilized to better illuminate the link between the self-reported occupations and reported tips.

October 14, 2025 506 Bulletin No. 2025–42
Table A: Reported Tips of Single-Job Holders, Tax Year 2023
Treasury
Tipped
Occupation
Code (TTOC)
TTOC Occupation Title
Percent with
Reported
Tips
1
Percent
of All
Reported
Tips
2
Reported Tips
as Percent
of Wages
of Tipped
Workers
3
Related Standard
Occupational
Classification
(SOC) System
Code
Beverage & Food Service
101Bartenders82.89.863.435-3011
102Wait Staff74.634.263.535-3031
103Food Servers, Nonrestaurant30.40.133.035-3041
104
Dining Room and Cafeteria Attendants
and Bartender Helpers
38.91.044.835-9011
105Chefs and Cooks12.82.017.1
35-1011, 35-2011,
35-2013, 35-2014,
35-2019
106Food Preparation Workers21.43.333.5
35-1012, 35-2021,
35-9099
107Fast Food and Counter Workers40.11.417.935-3023
108Dishwashers11.00.115.835-9021
109
Host Staff, Restaurant, Lounge, and
Coffee Shop
46.30.835.335-9031
110Bakers12.00.114.751-3011
Entertainment & Events
201Gambling Dealers70.94.370.7
39-3011, 39-1013,
39-3013
202
Gambling Change Persons and Booth
Cashiers
78.00.464.841-2012
203Gambling Cage Workers37.60.257.743-3041
204
Gambling and Sports Book Writers and
Runners
30.0*43.339-3012
205Dancers8.8*54.327-2031
206Musicians and Singers2.9*36.827-2042
207Disc Jockeys, Except Radio15.7*44.927-2091
208Entertainers and Performers7.9*52.027-2099
209Digital Content Creators7.9*52.027-2099
210
Ushers, Lobby Attendants, and Ticket
Takers
3.1*11.639-3031
211
Locker Room, Coatroom, and Dressing
Room Attendants
12.0*19.139-3093
Hospitality & Guest Services
301Baggage Porters and Bellhops7.00.118.639-6011
302Concierges3.7*11.739-6012
303Hotel, Motel, and Resort Desk Clerks11.70.742.843-4081
304Maids and Housekeeping Cleaners2.70.110.637-2012

Bulletin No. 2025–42 507 October 14, 2025
Table A: Reported Tips of Single-Job Holders, Tax Year 2023
Treasury
Tipped
Occupation
Code (TTOC)
TTOC Occupation Title
Percent with
Reported
Tips
1
Percent
of All
Reported
Tips
2
Reported Tips
as Percent
of Wages
of Tipped
Workers
3
Related Standard
Occupational
Classification
(SOC) System
Code
Home Services
401
Home Maintenance and Repair
Workers
0.50.116.1
49-9071, 49-9098,
49-9099, 49-9063,
49-2097, 51-7021
402
Home Landscaping and
Groundskeeping Workers
0.5*14.037-3011
403Home Electricians0.1*10.647-2111
404Home Plumbers0.2*5.147-2152
405
Home Heating and Air Conditioning
Mechanics and Installers
0.2*4.049-9021
406
Home Appliance Installers and
Repairers
1.8*1.949-9031
407Home Cleaning Service Workers2.70.110.637-2012
408Locksmiths2.0*3.149-9094
409Roadside Assistance Workers0.2*10.849-3023, 53-3032
Personal Services
501Personal Care and Service Workers0.60.131.131-1122, 39-9099
502Private Event Planners5.90.116.313-1121, 27-1023
503
Private Event and Portrait
Photographers
2.3*22.027-4021
504Private Event Videographers***27-4031
505Event Officiants0.2*16.821-2011
506Pet Caretakers19.10.316.239-2021
507Tutors0.5*34.525-3041
508Nannies and Babysitters0.7*28.839-9011
Personal Appearance & Wellness
601Skincare Specialists54.70.524.439-5094
602Massage Therapists55.80.625.731-9011
603
Barbers, Hairdressers, Hairstylists, and
Cosmetologists
52.43.222.739-5012, 39-5011
604Shampooers***39-5093
605Manicurists and Pedicurists36.20.314.939-5092
606Makeup Artists13.1*14.839-5091
607
Exercise Trainers and Group Fitness
Instructors
1.0*25.839-9031
608Tattoo Artists and Piercers11.1*15.827-1019
609Tailors0.8*15.951-6052
610
Shoe and Leather Workers and
Repairers
***51-6041
611
Eyebrow Threading and Waxing
Technicians
53.23.022.639-5012

October 14, 2025 508 Bulletin No. 2025–42
Table A: Reported Tips of Single-Job Holders, Tax Year 2023
Treasury
Tipped
Occupation
Code (TTOC)
TTOC Occupation Title
Percent with
Reported
Tips
1
Percent
of All
Reported
Tips
2
Reported Tips
as Percent
of Wages
of Tipped
Workers
3
Related Standard
Occupational
Classification
(SOC) System
Code
Recreation & Instruction
701Golf Caddies8.0*27.939-3091
702Self-Enrichment Teachers1.9*7.525-3021
703Sports and Recreation Instructors1.9*7.525-3021
704Tour Guides14.2*17.139-7011
705Travel Guides13.3*16.239-7012
706Recreational and Tour Pilots***53-2012
Transportation & Delivery
801Parking and Valet Attendants17.40.121.553-6021
802
Taxi and Rideshare Drivers and
Chauffeurs
24.9*21.253-3054
803Shuttle Drivers16.70.128.053-3053
804Goods Delivery People3.70.530.053-3031
805
Personal Vehicle and Equipment
Cleaners
4.8*12.453-7061
806Private and Charter Bus Drivers0.7*9.953-3052
807
Water Taxi Operators and Charter Boat
Workers
***53-5022
808
Rickshaw, Pedicab, and Carriage
Drivers
0.8*21.453-6099
809Home Movers2.52.832.853-7062
Total67.4
4
44.6
Notes: Data are for Tax Year 2023. An * indicates a share of less than 0.1% or a small cell size.
1
Percentage of individuals within the Related SOC code(s) who have at least $100 of tips reported on a W-2 or Form 4137
("reported tips").
2
Reported tips of individuals in Related SOC code(s) as a percentage of all reported tips. The denominator includes all
individuals regardless of whether their occupation could be mapped to a SOC code or if their SOC code is related to a TTOC
code.
3
Reported tips of individuals in Related SOC code(s) as a percentage of wages of individuals with tips in Related SOC code(s).
The denominator includes wages of individuals in Related SOC code(s) only if they report tips
4
Occupation codes are matched to SOC codes, which are then related to TTOC occupation titles, using the self-reported
character strings in the “Your occupation” box next to the signature box on the Form 1040. The occupation box does not
affect a taxpayer’s tax liability, and taxpayers with a single W-2 sometimes enter an occupation (character string) that does not
correspond to the W-2. For example, a student who was also a bartender might have entered “Student” in the occupation box, or
they may have misspelled “bartender” as “batrender”. In either case, we would not be able to match the “Student” or “batrender”
who received tips to a TTOC code. These data shortcomings are the primary reason that the percentage of all reported tips for
occupations listed in the table sum to only 67.4%.
Source: Office of Tax Analysis, August 9, 2025

Bulletin No. 2025–42 509 October 14, 2025
d. Economic Effects
In general, OBBBA granted taxpayers
the deduction for income earned in the
form of qualified tips. In the absence of the
list enumerated by these proposed regula-
tions, two taxpayers with otherwise simi-
lar tax situations would face uncertainty
as to whether this tax deduction applies to
their situation. In the absence of this guid-
ance, these taxpayers might make different
choices as to whether their tips qualify for
the deduction, and, therefore, face differ-
ent tax liability. By enumerating the List
of Occupations that Receive Tips, these
proposed regulations ensure that these two
taxpayers face the same tax treatment.
Consider an example where Employee
A is a hairstylist and Employee B is a
makeup artist, both working at Beauty
Salon 1. Employee A and Employee B
each receives $10,000 in tips from cus-
tomers at Beauty Salon 1. The House
Budget Committee report on the OBBBA,
H. Rept. 119-106, at 1502 (2025) included
hairstylists but not makeup artists in its
examples of occupations that tradition-
ally and customarily
28
received tips on or
before December 31, 2024. Thus, prior
to reading the guidance in theses pro-
posed regulations, Employee B might
have been unsure whether her occupation
as a makeup artist makes her eligible to
claim the deduction for her qualified tips.
By enumerating this list, Employee A and
Employee B have clarity that they are both
eligible to use the $10,000 in tips that they
receive while working at Beauty Salon 1
for purposes of the deduction in section
224 (assuming that all other requirements
to claim the deduction are satisfied).
Some taxpayers may reclassify their
occupation as described on their Form
1040 to fall under a category that appears
on the List of Occupations that Receive
Tips. This reclassification would merely
be a relabeling of their reported occupa-
tion and does not constitute a meaningful
economic change. Due to the tax prefer-
ence granted by the statute, some taxpay-
ers may genuinely change occupations to
one which appears on the List of Occu-
pations that Receive Tips. This effect is
ascribed to the statute.
ii. Illegal Activity
The proposed regulations clarify that
the term “qualified tips” does not include
tips that were received while performing
a service that is a felony or misdemeanor
under applicable law. For example, tips
received while performing services in
human trafficking, exotic pet smuggling,
counterfeiting or fencing stolen goods,
drug trafficking, drug dealing, and unli-
censed sales that violate the applicable law
would not be eligible for the deduction for
qualified tips. The Treasury Department
and the IRS do not have sufficient data
to determine the behavioral effects of the
clarification that the tips are excluded
from the definition of “qualified tips” if
they were earned while performing illegal
activities. The Treasury Department and
the IRS also do not have readily available
data and models to assess the economic
costs and benefits of excluding these tips
from the definition of “qualified tips,” but
the economic impact is expected to be
low. However, the Treasury Department
and the IRS invite comments on such
costs and data that could be used to ana-
lyze these behavioral effects.
For example, consider Employee C
who works as a bartender but does not have
the license or certification that is required
based on the applicable laws, and these
laws specify that serving alcohol without
a license is a misdemeanor. Employee C
receives $10,000 in tips during the year
while serving alcohol at a bar. “Bar-
tender” is on the List of Occupations that
Receive Tips, but serving alcohol as a bar-
tender without the proper license violates
the applicable law. Because the proposed
regulations clarify that the definition of
“qualified tips” excludes tips received
while performing services that violate the
applicable law, Employee C is aware that
the $10,000 in tips received while serving
alcohol without a license are not qualified
tips, and so Employee C does not claim
the deduction for these tips.
Alternatively, consider a different
example where Restaurant 2 includes a
bar that serves alcohol but does not have
the liquor license required by the appli-
cable laws. Employee D works on the
wait staff at Restaurant 2 and does not
serve alcohol, which the applicable laws
allow. Employee D receives $10,000 in
tips while waiting tables at Restaurant
2. They satisfy all other requirements to
claim the deduction under section 224.
Because the proposed regulations clarify
that “qualified tips” exclude tips received
while performing services that are illegal
under applicable law, and the services that
Employee D provided as a wait person
were legal, Employee D understands that
the $10,000 in tips are considered “qual-
ified tips” and Employee D claims the
deduction accordingly.
The clarification in the proposed regu-
lations, that tips are not considered “qual-
ified tips” if they were received while
performing services that are illegal under
applicable law, provides clarity for tax-
payers about whether their tips qualify for
the tax deduction under section 224, as
instituted by the OBBBA.
iii. Employees Participating in Voluntary
Tip Reporting Programs with Tip Rates
The proposed regulations clarify that
employees who enter into a tip agreement
through the TRDA or GITCA program
may determine the amount of their qual-
ified tips using applicable tip rates in their
agreement (as these tips are reported on
Form W-2), as well as amounts reported
to the IRS on Form 4137. This would
not affect the behavior of employees in
agreements under the TRDA or GITCA
programs as they are required to report
their tips (regardless of whether they are
eligible for the deduction under section
224) using average tip rates for their occu-
pational category that their employer and
the IRS have established.
For example, suppose Employee E and
Employee F both work as gambling deal-
ers at Casino 3, and they both have a tip
agreement as part of the GITCA program.
Employee E receives $11,000 in tips for
the year, and Employee F receives $12,000
in tips. The tip rate established by the
IRS and their employer for their occupa-
tion in the tip agreement requires them to
report $10,000 in tips. The Forms W-2 for
Employee E and Employee F from Casino
28
Initial drafts of the OBBBA legislation contemplated a deduction for tips received by individuals in occupations that traditionally and customarily received tips, but this language was later
revised to refer to occupations that customarily and regularly received tips.

October 14, 2025 510 Bulletin No. 2025–42
3 each report $10,000 in tips. Due to the
clarification in the proposed regulations
about the definition of “qualified tips” for
employees under a tip agreement through
the TRDA or GITCA program, Employee
E and Employee F each understand that
they may claim a deduction for $10,000
in qualified tips (if the other requirements
of section 224 are met) as those tips were
reported to the IRS and Casino 3 in accor-
dance with the tip rate established in their
tip agreement.
Some employees under a tip agreement
through the TRDA or GITCA programs
may decide to report the full amount of
their tips (in excess of the tip rate estab-
lished in their tip agreement) to the IRS
on Form 4137 or to their employer. These
employees would use that full amount as
qualified tips for the deduction under sec-
tion 224. Any change in the reporting of
tip income in excess of the established tip
rates is ascribed to the statute, which cre-
ates the deduction for qualified tips that
are reported on Form W-2 or Form 4137
(as well as Form 1099-NEC, Form 1099-
K, and Form 1099-MISC).
iv. Summary
Based on the available models and
data, the Treasury Department and the
IRS estimate that the economic costs and
benefits of the proposed regulations would
be small. The Treasury Department and
the IRS invite public comments and addi-
tional data on the economic effects that
would result from these proposed regula-
tions.
II. Paperwork Reduction Act
This proposed regulation does not
create new collection requirements, as
defined under the Paperwork Reduction
Act (44 U.S.C. 3501-3520), and does not
alter any previously approved OMB infor-
mation collection requirements and their
associated burden.
III. Regulatory Flexibility Act
The Secretary of the Treasury certifies
that these proposed regulations will not
have a significant economic impact on a
substantial number of small entities pur-
suant to the Regulatory Flexibility Act
(5 U.S.C. chapter 6). This certification
is based on the fact that these proposed
regulations would not impose any new
requirements on small entities but rather
provide individuals rules for claiming
the deduction under section 224 of the
Code by specifying the scope of affected
occupations as those contained in the
proposed regulations and providing clar-
ity on the definition of qualified tips.
Because the regulation does not directly
impact small entities a Regulatory Flexi-
bility Act (5 U.S.C. chapter 6) analysis is
not required.
Notwithstanding this certification that
the proposed regulations would not have a
significant economic impact on a substan-
tial number of small entities, the Treasury
Department and the IRS invite comments
on the impacts these proposed regulations
may have on small entities.
IV. Section 7805(f)
Pursuant to section 7805(f) of the
Code, these proposed regulations will be
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administra-
tion for comment on their impact on small
business.
V. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in any
one year by a State, local, or Tribal gov-
ernment, in the aggregate, or by the pri-
vate sector, of $100 million in 1995 dol-
lars, updated annually for inflation. These
proposed regulations do not include any
Federal mandate that may result in expen-
ditures by State, local, or Tribal govern-
ments, or by the private sector, in excess
of that threshold.
VI. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Execu-
tive order. These proposed regulations
do not have federalism implications, do
not impose substantial direct compliance
costs on State and local governments, and
do not preempt State law within the mean-
ing of the Executive order.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consider-
ation will be given to comments regarding
the notice of proposed rulemaking that are
submitted timely to the IRS as prescribed
in this preamble under the ADDRESSES
section. The Treasury Department and
the IRS request comments on all aspects
of the proposed regulations. In partic-
ular, the Treasury Department and IRS
request comments on the application of
the existing rules under § 1.199A-5(b) to
the SSTB definition in section 224, and
whether the definitions in § 1.199A-5(b)
should be refined to better align with the
anti-abuse provision in section 224 and
the congressional directive for the Secre-
tary to publish a list of occupations that
customarily and regularly received tips
on or before December 31, 2024. Addi-
tionally, Treasury and the IRS are con-
cerned that taxpayers might misclassify
income as tips and request comments
on how to address this issue in the final
regulations. All comments will be made
available at https://www.regulations.gov.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn.
A public hearing has been scheduled for
October 23, 2025, beginning at 10 a.m. ET,
in the Auditorium at the Internal Revenue
Building, 1111 Constitution Avenue, NW.,
Washington, DC. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
Participants may alternatively attend the
public hearing by telephone.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish

Bulletin No. 2025–42 511 October 14, 2025
to present oral comments at the hearing
must submit an outline of the topics to be
discussed and the time to be devoted to
each topic by October 22, 2025. A period
of 10 minutes will be allotted to each
person for making comments. An agenda
showing the scheduling of the speakers
will be prepared after the deadline for
receiving outlines has passed. Copies of
the agenda will be available free of charge
at the hearing. If no outline of the topics
to be discussed at the hearing is received
by October 22, 2025, the public hearing
will be cancelled. If the public hearing is
cancelled, a notice of cancellation of the
public hearing will be published in the
Federal Register.
Individuals who want to testify in
person at the public hearing must send
an email to publichearings@irs.gov to
have your name added to the building
access list. The subject line of the email
must contain the regulation number REG-
110032-25 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY in Person at
Hearing for REG-110032-25.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-110032-25 and the language
TESTIFY Telephonically. For example,
the subject line may say: Request to TES-
TIFY Telephonically at Hearing for REG-
110032-25.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number REG-110032-25 and the language
ATTEND In Person. For example, the
subject line may say: Request to ATTEND
Hearing In Person for REG-110032-25.
Requests to attend the public hearing must
be received by 5:00 p.m. ET on October
21, 2025.
Individuals who want to attend the pub-
lic hearing by telephone without testifying
must also send an email to publichear-
ings@irs.gov to receive the telephone
number and access code for the hearing.
The subject line of the email must con-
tain the regulation number REG-110032-
25 and the language ATTEND Hearing
Telephonically. For example, the subject
line may say: Request to ATTEND Hear-
ing Telephonically for REG-110032-25.
Requests to attend the public hearing must
be received by 5:00 p.m. ET on October
21, 2025.
Hearings will be made accessible to
people with disabilities. To request special
assistance during a hearing please contact
the Publications and Regulations Section
of the Office of Associate Chief Counsel
(Procedure and Administration) by send-
ing an email to publichearings@irs.gov
(preferred) or by telephone at (202) 317-
6901 (not a toll-free number) by October
20, 2025.
Drafting Information
The principal author of these proposed
regulations is the Office of Associate Chief
Counsel (Employee Benefits, Exempt
Organizations and Employment Taxes).
However, other personnel from the IRS
and the Treasury Department participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1-INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry
for § 1.224-1 in numerical order to read in
part as follows:
Authority: 26 U.S.C. 7805* * *
* * * * *
§ 1.224-1 also issued under 26 U.S.C.
224(d)(2)(C) and (g) and sec. 70201(h) of
Public Law 119-21, 139 Stat. 72 (July 4,
2025), commonly known as the One, Big,
Beautiful Bill Act.
* * * * *
Par. 2. Section 1.224-1 is added to read
as follows:
§ 1.224-1 Qualified tips.
(a) In general. Under section 224(a) of
the Internal Revenue Code (Code), there
shall be allowed a deduction under section
63(b) for an amount equal to the qualified
tips received by an individual during the
taxable year that are included separately
on statements furnished to the individual
pursuant to section 6041(d)(3), section
6041A(e)(3), section 6050W(f)(2), or sec-
tion 6051(a)(18) of the Code, or reported
by the taxpayer on Form 4137, Social
Security and Medicare Tax On Unreported
Tip Income (or successor).
(b) Deduction limitations—(1) In gen-
eral. The amount allowed as a deduction
under section 224(a) and paragraph (a)
of this section for any taxable year shall
not exceed $25,000, regardless of filing
status.
(2) Limitation based on adjusted gross
income. After the application of the limita-
tion in paragraph (b)(1) of this section, the
amount allowable as a deduction under
section 224(a) and paragraph (a) of this
section shall be further reduced (but not
below zero) by $100 for each $1,000 by
which the taxpayer’s modified adjusted
gross income exceeds $150,000 ($300,000
in the case of a joint return). For purposes
of this paragraph (b)(2), modified adjusted
gross income means the adjusted gross
income of the taxpayer from the taxable
year increased by any amount excluded
from gross income under section 911, sec-
tion 931, or section 933.
(3) Examples. The following examples
illustrate the rules of paragraphs (b)(1)
and (2) of this section.
(4) Example 1. Employee A satisfies all the
requirements under section 224 and Employee A’s
filing status for 2025 is single. A received $26,000
in qualified tips in 2025. Since this is greater than
the $25,000 limitation in paragraph (b)(1) of this sec-
tion, the $26,000 qualified tip amount is first reduced
from $26,000 to $25,000. A’s modified adjusted
gross income for 2025 is $200,000. The qualified tip
amount is further reduced (but not below zero) by
$100 for each $1,000 by which A’s modified adjusted
gross income exceeds $150,000 (the threshold for a
single filer). A’s modified adjusted gross income
exceeds $150,000 by $50,000. To calculate the
deduction, A first divides $50,000 by $1,000 to get
50. Thus, A’s deduction under section 224(b)(2) is
further reduced by $5,000 ($100 x 50), from $25,000
to $20,000.
(5) Example 2. Employee K satisfies all the
requirements under section 224 and Employee K’s
filing status for 2025 is single. K received $10,000

October 14, 2025 512 Bulletin No. 2025–42
in qualified tips in 2025. Since this amount is less
than $25,000, the limitation in paragraph (b)(1) of
this section does not apply. K’s modified adjusted
gross income for 2025 is $180,000. K’s deduc-
tion is reduced (but not below zero) by $100 for
each $1,000 by which K’s modified adjusted gross
income exceeds $150,000 (the threshold for a
single filer). K’s modified adjusted gross income
exceeds $150,000 by $30,000. To calculate the
deduction, K first divides $30,000 by $1,000 to get
30. Thus, K’s deduction under section 224(b)(2) is
reduced by $3,000 ($100 x 30), from $10,000 to
$7,000.
(c) Qualified tips defined—(1) In gen-
eral. Subject to the requirements in para-
graph (c)(3) of this section, qualified tips
are amounts received as cash tips (as
defined in paragraph (c)(2) of this section)
by an individual in an occupation that cus-
tomarily and regularly received tips on or
before December 31, 2024, as provided in
paragraph (f) of this section.
(2) Cash tips defined. For purposes of
paragraph (c)(1) of this section, cash tips
are tips received from customers or, in the
case of an employee, through a manda-
tory or voluntary tip-sharing arrangement,
such as a tip pool, that are paid in a cash
medium of exchange, including by cash,
check, credit card, debit card, gift card,
tangible or intangible tokens that are read-
ily exchangeable for a fixed amount in
cash (such as casino chips), and any other
form of electronic settlement or mobile
payment application that is denominated
in cash. Cash tips do not include items
paid in any medium other than cash, such
as event tickets, meals, services, or other
assets that are not exchangeable for a
fixed amount in cash (such as most digi-
tal assets). For purposes of this paragraph
(c)(2), tips are amounts paid by custom-
ers for services that are in excess of the
amount agreed to, required, charged, or
otherwise reasonably expected to have to
be paid for the services in an arm’s-length
transaction.
(3) Amounts must be paid voluntarily.
Amounts are qualified tips only if they
are paid voluntarily and without any con-
sequence in the event of nonpayment,
are not the subject of negotiation, and
are determined by the payor. Qualified
tips must be paid without compulsion.
Thus, service charges, automatic gratu-
ities and any other mandatory amounts
automatically added to a customer’s bill
by the vendor or establishment are not
qualified tips, even if the amounts are
subsequently distributed to employees.
If a customer is expressly provided an
option to disregard or modify amounts
added to a bill, such amounts are not
mandatory amounts.
(i) Examples. The following examples
illustrate the rules of this paragraph (c)(3).
Unless otherwise indicated, each exam-
ple assumes that other requirements for
claiming the deduction under section 224
are satisfied.
(ii) Example 1. Restaurant W’s menu specifies
that an automatic 18% charge will be added to all
bills for parties of six or more customers. Customer
D’s bill for food and beverages for her party of six
includes the 18% charge on the “tip line” and the total
bill includes this amount. Restaurant W distributes
this amount to the waitstaff and bussers. Customer
D did not determine the amount of the additional
charge, nor was Customer D expressly provided an
option to disregard or modify the amount. Customer
D did not make the payment free from compulsion.
Under these circumstances, the 18% charge is not
a qualified tip for purposes of the deduction under
section 224.
(iii) Example 2. The facts are the same as in para-
graph (c)(3)(ii) of this section (Example 1) except
the bill has a line labeled “additional tip amount.”
In this case, Customer D adds on the “additional tip
line” an amount equal to 2% of the price for food and
beverages. As in paragraph (c)(3)(ii) of this section
(Example 1), the 18% charge is not a qualified tip
for the purposes of the deduction under section 224.
However, the 2% additional amount is a qualified tip
for the purposes of the deduction under section 224,
because Customer D voluntarily paid the 2% addi-
tional amount without compulsion.
(iv) Example 3. Customer E dines at Restaurant
X with a party of eight people. E’s bill for food and
beverages for the party of eight includes a “recom-
mended tip” equal to 18% of the price for food and
beverages. However, there is a line for the customer
to subtract (including to zero) or add to the recom-
mended tip amount before paying the bill. Customer
E subtracts 3% from the recommended tip amount
resulting in a tip of 15% of the price for food and
beverages. Customer E had a right to determine the
additional amount, and he was expressly provided
the option to disregard or modify the “recommended
tip” amount. Under these circumstances, the recom-
mended 18% amount is not a service charge. Rather,
the 15% amount that the customer voluntarily paid
without compulsion is a qualified tip for purposes of
the deduction under section 224.
(v) Example 4. Customer F has a meal at Restau-
rant Y. The server presents the bill for the meal to
Customer F on an electronic handheld point of sale
(POS) device. The POS device includes the charges
for each food and beverage item and the applicable
tax. The POS device also prompts Customer F to
leave a tip and provides the following options for
Customer F: 15%, 18%, 20%, other, and no tip. Cus-
tomer F selects 18% and pays the total balance via
credit card through the POS device. Customer F had
a right to determine the additional amount, and Cus-
tomer F was expressly provided the option to leave
no tip. Under these circumstances, the 18% amount
is a qualified tip.
(vi) Example 5. The facts are the same as in para-
graph (c)(3)(v) of this section (Example 4), but the
choices on the POS device are 15%, 18%, and 20%.
Customer F must select a “tip amount” before paying
the bill. Customer F selects 15% and pays the total
balance via credit card through the POS device. Cus-
tomer F did not voluntarily determine the amount of
the additional charge because Customer F was forced
to select an amount greater than zero. Customer D
was not expressly provided an option to disregard
or modify the amounts presented. Customer D did
not make the payment free from compulsion. Under
these circumstances, the 15% charge is not a quali-
fied tip for purposes of the deduction under section
224.
(vii) Example 6. The facts are the same as in
paragraph (c)(3)(vi) of this section (Example 5), but
Customer F selects 18% and pays the total balance
via credit card through the POS device. Customer
F did not voluntarily determine the lowest required
amount (15%) of the additional charge because Cus-
tomer F was forced to select an amount greater than
zero. Customer F was not expressly provided an
option to disregard or modify the amounts presented.
Customer F did not make the payment of 15% free
from compulsion. Under these circumstances, 15%
of the charge is not a qualified tip for purposes of the
deduction under section 224. However, the 3% addi-
tional amount is a qualified tip for the purposes of
the deduction under section 224, because Customer
F voluntarily, without compulsion, paid the 3% addi-
tional amount.
(viii) Example 7. Self-employed painter G is
hired by customer Z to paint customer Z’s house.
Included in the service contract between painter G
and customer Z is a provision adding a 15% service
charge to the total cost of the final bill. After the ser-
vice contract is signed by both painter G and cus-
tomer Z, painter G completes the painting services.
After the painting services are completed, customer
Z pays the amount agreed upon in the service con-
tract, including the 15% service charge. In addition,
customer Z pays painter G a cash tip amount, not
provided for in the service agreement, equal to 10%
of the final bill. The 15% service charge is not a
qualified tip because it was included in the service
contract before the painting services were provided
and painter G’s performance of the painting services
was conditioned on the agreement to pay the 15%
service charge. However, because the 10% cash tip
amount was not included in the service agreement,
and because customer Z voluntarily paid the 10%
cash tip amount without compulsion, the 10% cash
tip amount is a qualified tip for purposes of the
deduction under section 224.
(ix) Example 8. Shuttle Driver S enters into a con-
tract with Customer Q. Under the terms of the con-
tract, Shuttle Driver S will drive Customer Q to the
airport for either $60 (consisting of a $50 charge and
a 20% gratuity) or $65 (consisting of just the charge
for the service with no gratuity). The contract states
that an additional tip based on the service provided
is welcome. Customer Q selects the first option and
pays Shuttle Driver S $60. After arriving at the air-
port, Customer Q pays Shuttle Driver S an additional
$5. The 20% gratuity is not a qualified tip because it

Bulletin No. 2025–42 513 October 14, 2025
was not paid voluntarily, and not providing the 20%
gratuity would have resulted in Customer Q paying
a higher amount. However, the additional $5 amount
added after the service was completed is made with-
out compulsion and is a qualified tip for purposes of
this section.
(x) Example 9. Landscaper L is self-employed
and enters into a contract to install a new patio for
Customer O for $5,000. When the services are com-
plete, Customer O pays Landscaper L $5,100, and
tells Landscaper L that the additional $100 is a tip for
L’s services. Landscaper L records the payment on
the business’s books as a charge for $4,500 for instal-
lation of the patio and $600 as a tip. The amount of
the qualified tip is $100 because this is the amount
that was determined by the payor (the customer). The
additional $500 is not a qualified tip because it was
not paid voluntarily and was not designated by the
payor (the customer). Amounts reclassified by the
service provider from the agreed contract price are
not qualified tips but are instead part of the charge
for services. The additional $500 also is not a tip
because it is not in excess of the amount that was
agreed to be paid for L’s services.
(4) Special rules regarding a speci-
fied service trade or business. An amount
received by an individual in the course of
a specified service trade or business (as
defined in section 199A(d)(2) of the Code)
is not a qualified tip. If the individual per-
forms services as an employee, the relevant
trade or business is the trade or business of
the employer in the course of which the
employee is performing services. Thus, an
amount received by an employee perform-
ing services for the employee’s employer
in the course of a specified service trade
or business operated by the employee’s
employer is not a qualified tip, regard-
less of whether the trade or business or an
owner of the trade or business is eligible
for a deduction under section 199A, and
regardless of whether the employee is per-
forming services in an occupation listed
in paragraph (f) of this section or whether
that occupation is a specified service trade
or business.
(i) Examples. The following examples
illustrate the rules of this paragraph (c)(4).
Unless otherwise indicated, each exam-
ple assumes that other requirements for
claiming the deduction under section 224
are satisfied.
(ii) Example 1. Self-employed Comedian C per-
forms a stand-up comedy routine at Performance
Venue V. The audience members at Performance
Venue V give Comedian C cash tips after the per-
formance. The cash tips received by Comedian C
are not qualified tips because the tips are received in
the course of Comedian C’s trade or business in the
performing arts, which is a specified service trade or
business. Such cash tips are not qualified tips not-
withstanding the fact that Comedian C’s occupa-
tion (comedian) is included in the Treasury Tipped
Occupation Code (TTOC) category of “Entertain-
ers and performers,” on the list of occupations that
customarily and regularly received tips on or before
December 31, 2024, as provided in paragraph (f) of
this section.
(iii) Example 2. Pianist P is an employee of Hotel
H. Hotel H does not operate a trade or business that is
a specified service trade or business. Pianist P plays
the piano in the lobby of Hotel H. Hotel H’s patrons
often leave cash tips in a jar on the piano for Pianist
P. The cash tips received by Pianist P are qualified
tips, even though the tips are received for services
in the performing arts, which is a specified service
trade or business, because Pianist P is performing
services as an employee, the employer (Hotel H) is
not operating a specified service trade or business,
and Pianist P’s occupation (piano player) is included
in the TTOC category of “Musicians and singers,”
on the list of occupations that customarily and regu-
larly received tips on or before December 31, 2024,
as provided in paragraph (f) of this section.
(iv) Example 3. Bartender B is an employee of
Company R. Company R does not operate a trade or
business that is a specified service trade or business.
Theater T enters into a contract with Company R to
provide bartending services during the intermission
of certain live performances occurring at Theater T.
During the intermissions, Bartender B receives cash
tips from patrons at Theater T. The cash tips are qual-
ified tips because Bartender B is performing services
as an employee, the employer (Company R) is not
engaged in a specified service trade or business, and
the employee’s occupation (bartender) is included
in the TTOC category of “Bartenders” on the list of
occupations that customarily and regularly received
tips on or before December 31, 2024, as provided in
paragraph (f) of this section.
(5) Employees participating in vol-
untary tip reporting programs with tip
rates. Employees who enter into a Tipped
Employee Participation Agreement as
part of the Tip Reporting Determination
Agreement (TRDA) program or a Model
Gaming Employee Tip Reporting Agree-
ment as part of the Gaming Industry Tip
Compliance Agreement (GITCA) pro-
gram may determine the amount of qual-
ified tips using the applicable tip rate in
their agreement (and amounts reported
on Form 4137 (or successor)) in lieu of
reporting actual tips received. The use of
the TRDA or GITCA program to deter-
mine qualified tips for purposes of this
section will not affect the tip audit protec-
tion otherwise applicable to the employ-
ee’s agreement. Employees participating
in the TRDA or GITCA program remain
subject to all remaining requirements in
section 224 and this section regarding eli-
gibility for the deduction.
(6) Illegal activity. Any amount
received for a service the performance of
which is a felony or misdemeanor under
applicable law is not a qualified tip.
(7) Prostitution. Any amount received
for prostitution services is not a qualified
tip.
(8) Pornography. Any amount received
for pornographic activity is not a qualified
tip.
(9) No ownership in or employment by
payor. A tip received by an employee or
other service provider who has an own-
ership interest in or is employed by the
payor of the tip is not a qualified tip.
(d) Trade or business limitations for
tips received in course of trade or busi-
ness—(1) In general. In the case of quali-
fied tips received by an individual during
any taxable year in the course of a trade
or business (other than a trade or business
of performing services as an employee) of
such individual, such qualified tips shall be
deducted only to the extent that the gross
income for the taxpayer from such trade
or business for such taxable year (includ-
ing such qualified tips) exceeds the sum of
the deductions (other than the deduction
allowed for qualified tips) allocable to the
trade or business in which such qualified
tips are received by the individual for the
taxable year. The deduction allowed for
qualified tips is not taken into account for
this purpose because it is not a trade or
business deduction. Thus, generally, for
self-employed taxpayers, the deduction
under section 224 for a trade or business
is limited to the individual’s net income
(without regard to the section 224 deduc-
tion) from that trade or business.
(2) Examples. The following examples
illustrate the rule of paragraph (d)(1) of
this section.
(3) Example 1. Manicurist M is self-employed
and owns a nail salon. Manicurist M has no other
employment. For the taxable year, Manicurist M has
gross income of $100,000 that consists of $70,000
of fees for services at the nail salon and $30,000
of qualified tips. Manicurist M’s total deductible
expenses (other than the deduction for qualified
tips) are $40,000. Manicurist M’s gross income of
$100,000 from the trade or business exceeds the sum
of the deductions for that trade or business (other
than qualified tips) by $60,000 ($100,000 - $40,000
= $60,000). Because the maximum deduction under
section 224 and paragraph (b)(1) of this section
is $25,000, Manicurist M is permitted to deduct
$25,000.
(4) Example 2. Manicurist M is self-employed
and owns a nail salon. Manicurist M has no other
employment. For the taxable year, Manicurist M has
gross income of $75,000 that consists of $55,000 of

October 14, 2025 514 Bulletin No. 2025–42
fees for services at the nail salon and $20,000 of qual-
ified tips. Manicurist M’s total deductible expenses
(other than the deduction for qualified tips) are
$60,000. Manicurists M’s gross income of $75,000
from the trade or business exceeds the sum of the
deductions from that trade or business by $15,000
($75,000 - $60,000 = $15,000). Although Manicurist
M received $20,000 in qualified tips, Manicurist M
is allowed a qualified tip deduction of only $15,000,
which is the extent to which Manicurist M’s gross
income from the trade or business ($75,000) exceeds
the total deductible expenses (other than qualified
tips) ($60,000) from that trade or business.
(e) Social Security numbers and mar-
ried individuals—(1) In general. To claim
a deduction under section 224, a taxpayer
must include on the taxpayer’s tax return
the Social Security number (SSN), as
defined in section 24(h)(7) of the Code, of
the individual who has received the qual-
ified tips.
(2) Married taxpayers. Taxpayers who
are married, as defined by section 7703
of the Code, must file a joint return to
claim the deduction allowed by section
224. However, to claim the deduction
allowed by section 224, married taxpay-
ers are required to include only the SSN
of the taxpayer who has received the tips
to claim the deduction, and an SSN is
required of both taxpayers only when both
have qualified tips for which the deduction
is being claimed. In accordance with sec-
tion 224(b)(1), the total amount of quali-
fied tips that can be deducted per calendar
year is $25,000 regardless of filing status.
After applying the $25,000 limitation, the
deduction amount is further subject to the
phase-out based on the taxpayers’ modi-
fied adjusted gross income described in
section 224(b)(2).
(3) Example. Taxpayers J and K are
married, as defined in section 7703, and
they file a joint income tax return. They
both work in occupations that customarily
and regularly received tips on or before
December 31, 2024. J receives $15,000
in qualified tips in 2025, and K receives
$20,000 in qualified tips in 2025. The
maximum deduction J and K may claim
pursuant to section 224 on their joint
return for 2025 is $25,000.
(f) Occupations that customarily
and regularly received tips on or before
December 31, 2024 — (1) In general.
The occupations in Table 1 customarily
and regularly received tips on or before
December 31, 2024. Subject to the require-
ments in section 224 and this section, only
qualified tips received in connection with
the occupations listed in Table 1 are eli-
gible for the deduction in section 224(a).
(2) Specified service trade or business
exclusion. An individual working in an
occupation listed in Table 1 is not eligi-
ble for the deduction in section 224(a)
with respect to any amounts received in
the course of a trade or business that is
a specified service trade or business. An
individual engaged in the trade or busi-
ness of being an employee is not eligi-
ble for the deduction in section 224(a)
with respect to any amounts received for
providing services for an employer in
the course of a trade or business of the
employer that is a specified service trade
or business.
Table 1 to paragraph (f)(1)—Occupations that Customarily and Regularly Received Tips on or Before December 31, 2024
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
Beverage and Food Service
101
Bartenders
Mix and serve drinks to patrons, directly
or through waitstaff.
Barkeep, mixologist, taproom
attendant, sommelier
35-3011
102
Wait Staff
Take orders and serve food and
beverages to patrons at tables in dining
establishment.
Cocktail waitress, dining car
server
35-3031
103
Food Servers,
Non-restaurant
Serve food to individuals outside of a
restaurant environment, such as in hotel
rooms, residential care facilities, or cars.
Room service food server,
boat hop, beer cart server
35-3041
104
Dining Room
and Cafeteria
Attendants
and Bartender
Helpers
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.
Bar back, bar helper, busser35-9011
105
Chefs and
Cooks
Direct and may participate in the
preparation, seasoning, and cooking of
salads, soups, fish, meats, vegetables,
desserts, or other foods.
Executive chef, pastry chef,
sous chef, fast food cook,
private chef, restaurant
cook, saucier, food truck
cook, banquet cook, caterer,
chocolatier, confectioner
35-1011, 35-2011,
35-2013, 35-2014,
35-2019

Bulletin No. 2025–42 515 October 14, 2025
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
106
Food
Preparation
Workers
Perform a variety of food preparation
duties other than cooking, such as
preparing cold foods and shellfish, slicing
meat, and brewing coffee or tea.
Salad maker, sandwich
maker, fruit and vegetable
parer, kitchen steward
35-1012, 35-2021,
35-9099
107
Fast Food and
Counter Workers
Serve customers at 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.
Barista, ice cream server,
cafeteria server
35-3023
108
Dishwashers
Clean dishes, kitchen, food preparation
equipment, or utensils.
Dish room worker, silverware
cleaner
35-9021
109
Host Staff,
Restaurant,
Lounge, and
Coffee Shop
Welcome patrons, seat them at tables
or in lounge, and help ensure quality of
facilities and service.
Maître d'hôtel, dining room
host
35-9031
110
Bakers
Mix and bake ingredients to produce
breads, rolls, cookies, cakes, pies,
pastries, or other baked goods.
Bread baker, cake baker,
bagel baker, pastry finisher
51-3011
Entertainment and Events
201
Gambling
Dealers
Operate gambling games. Stand or sit
behind table and operate games of chance
by dispensing the appropriate number of
cards or blocks to players or operating
other gambling equipment. Distribute
winnings or collect players' money or
chips. May compare the house's hand
against players' hands.
Blackjack dealer, craps
dealer, poker dealer, roulette
dealer, pit clerk
39-3011, 39-1013,
39-3013
202
Gambling
Change Persons
and Booth
Cashiers
Exchange coins, tokens, and chips for
patrons' money. May issue payoffs and
obtain customer's signature on 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.
Slot attendant, mutuel teller41-2012
203
Gambling Cage
Workers
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
transaction.
Casino cashier, cage cashier43-3041

October 14, 2025 516 Bulletin No. 2025–42
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
204
Gambling and
Sports Book
Writers and
Runners
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.
Betting runner, bingo worker,
keno runner, race book writer
39-3012
205
DancersPerform dances. Club dancer, dance artist27-2031
206
Musicians and
Singers
Play one or more musical instruments or
sing.
Instrumentalist, accompanist,
lounge singer
27-2042
207
Disc Jockeys,
Except Radio
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).
Deejay, club DJ27-2091
208
Entertainers and
Performers
Entertain audiences with artistic
expression.
Comedian, clown, magician,
street performer
27-2099
209
Digital Content
Creators
Produce and publish on digital platforms
original entertainment and personality-
driven content, such as live streams,
short-form videos, or podcasts.
Streamer, online video
creator, social media
influencer, podcaster
27-2099
210
Ushers, Lobby
Attendants, and
Ticket Takers
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.
Ticket collector, theater usher39-3031
211
Locker Room,
Coatroom, and
Dressing Room
Attendants
Provide personal items to patrons or
customers in locker rooms, dressing
rooms, or coatrooms.
Coat checker, washroom
attendant, bathhouse
attendant
39-3093
Hospitality and Guest Services
301
Baggage Porters
and Bellhops
Handle baggage for travelers at
transportation terminals or for guests at
hotels or similar establishments.
Hotel baggage handler,
curbside airport check-in
assistant
39-6011
302
Concierges
Assist patrons at hotels 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.
Hotel guest service agent,
activities concierge
39-6012

Bulletin No. 2025–42 517 October 14, 2025
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
303
Hotel, Motel,
and Resort Desk
Clerks
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.
Front desk clerk, registration
clerk
43-4081
304
Maids and
Housekeeping
Cleaners
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.
Hotel maid, housekeeping
staff
37-2012
Home Services
401
Home
Maintenance
and Repair
Workers
Perform work to keep machines,
mechanical equipment, or the structure
of a building in repair. May maintain and
repair musical instruments, furniture,
antiques, and non-fixtures.
Handyman, roofer, window
repairer, house painter
(interior or exterior), flooring
installer, piano tuner,
furniture restorer, antique
repairer
49-9071, 49-9098,
49-9099, 49-9063,
49-2097, 51-7021
402
Home
Landscaping and
Groundskeeping
Workers
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.
Lawn mower, gardener, tree
trimmer, weed sprayer
37-3011
403
Home
Electricians
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.
Electrician47-2111
404
Home Plumbers
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.
Plumber, pipefitter,
steamfitter, sprinkler installer
47-2152
405
Home Heating
and Air
Conditioning
Mechanics and
Installers
Install or repair heating, central air
conditioning, HVAC, or refrigeration
systems, including oil burners, hot-air
furnaces, and heating stoves.
Air conditioning repairer,
heating system installer,
chimney sweep
49-9021

October 14, 2025 518 Bulletin No. 2025–42
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
406
Home Appliance
Installers and
Repairers
Repair, adjust, or install all types of
electric or gas household appliances,
such as refrigerators, washers, dryers, and
ovens.
Washing machine installer,
dishwasher repairer
49-9031
407
Home Cleaning
Service Workers
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.
House cleaner, pool cleaner,
carpet cleaner, window
washer
37-2012
408
Locksmiths
Repair and open locks, make keys,
change locks and safe combinations, and
install and repair safes.
Safe installer, key maker49-9094
409
Roadside
Assistance
Workers
Provide on-road assistance to drivers
whose vehicles have broken down.
Tow truck driver, car battery
technician, tire repairer, tire
changer, car fuel deliverer
49-3023, 53-3032
Personal Services
501
Personal Care
and Service
Workers
Provide personalized assistance to
individuals with disabilities or illness
who require help with personal care and
activities of daily living support (for
example, feeding, bathing, dressing,
grooming, toileting, and ambulation).
May also provide help with tasks
such as preparing meals, doing light
housekeeping, and doing 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 community, or
at a daytime nonresidential facility.
Elderly companion, personal
care aide, butler, house sitter,
personal valet
31-1122, 39-9099
502
Private Event
Planners
Coordinate activities of staff or clients to
make arrangements for private events.
May provide creative design for décor,
floral arrangements, and invitations.
Wedding planner, party
planner, event florist
13-1121, 27-1023
503
Private Event
and Portrait
Photographers
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.
Wedding photographer,
headshot photographer
27-4021
504
Private Event
Videographers
Operate video or film camera to record
images or scenes of private events.
Wedding videographer27-4031
505
Event Officiants
Lead and facilitate the ceremony for life
events such as weddings or funerals.
Ceremonies may be religious or civil
services.
Wedding officiant, funeral
celebrant, clergy, vow
renewal officiant
21-2010
506
Pet Caretakers
Feed, water, groom, bathe, exercise, or
otherwise provide care to promote and
maintain the well-being of pets.
Pet groomer, pet sitter, pet
walker, kennel worker, pet
trainer
39-2021

Bulletin No. 2025–42 519 October 14, 2025
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
507
Tutors
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. May provide instruction
in person or remotely.
Reading tutor, math tutor,
language tutor
25-3041
508
Nannies and
Babysitters
Attend to children at businesses and
private households. Perform a variety of
tasks, such as dressing, feeding, bathing,
and overseeing play.
Au pair, child sitter at hotels
and gyms
39-9011
Personal Appearance and Wellness
601
Skincare
Specialists
Provide skincare treatments to face
and body to enhance an individual's
appearance.
Facialist, electrologist, spa
esthetician
39-5094
602
Massage
Therapists
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.
Masseuse, deep tissue
massage therapist, sports
massage therapist
31-9011
603
Barbers,
Hairdressers,
Hairstylists, and
Cosmetologists
Provide beauty or barbering services,
such as cutting, coloring, and styling hair,
massaging and treating scalps, trimming
beards or giving shaves.
Wig stylist, beautician, hair
colorist, hair cutter
39-5012, 39-5011
604
ShampooersShampoo and rinse customers' hair.
Scalp treatment specialist,
shampoo assistant
39-5093
605
Manicurists and
Pedicurists
Clean and shape customers' fingernails
and toenails. May polish or decorate
nails.
Nail technician, fingernail
sculptor, nail painter
39-5092
606
Eyebrow
Threading
and Waxing
Technicians
Enhance and maintain clients' eyebrows
using techniques such as threading,
waxing, or tweezing.
Eyebrow waxer39-5091
607
Makeup ArtistsDesign and apply makeup looks.
Wedding makeup artist, party
makeup artist
39-9031
608
Exercise
Trainers and
Group Fitness
Instructors
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.
Aerobics trainer, yoga
instructor, personal trainer
27-1019
609
Tattoo Artists
and Piercers
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.
Tattoo artist, ear piercer, nose
piercer
51-6052

October 14, 2025 520 Bulletin No. 2025–42
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
610
Tailors
Design, make, alter, repair, or fit
garments.
Tailor, seamstress, clothing
alterations worker
51-6041
611
Shoe and
Leather Workers
and Repairers
Construct, decorate, or repair leather and
leather-like products, such as luggage,
shoes, and saddles. May use hand tools.
Cobbler, shoe shiner39-5012
Recreation and Instruction
701
Golf Caddies
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.
Golf caddie, golf cart
attendant
39-3091
702
Self-Enrichment
Teachers
Teach or instruct individuals or
groups for the primary purpose of
self-enrichment, rather than for an
occupational objective, educational
attainment, competition, or fitness.
Knitting instructor, piano
teacher, art instructor, dance
teacher
25-3021
703
Recreational and
Tour Pilots
Pilot and navigate the flight of fixed-wing
aircraft, helicopters, or other airborne
vehicle for recreational or touring
purposes. Excludes regional national,
and international airline pilots, and
emergency services pilots.
Helicopter tour pilot, hot air
balloon aeronaut, skydiving
pilot
25-3021
704
Tour Guides
Guide individuals or groups on
sightseeing tours or through places of
interest, such as industrial establishments,
public buildings, and art galleries.
Museum guide, sightseeing
guide
39-7011
705
Travel Guides
Plan, organize, and conduct long-
distance travel, tours, and expeditions for
individuals and groups.
Cruise director, river
expedition guide
39-7012
706
Sports and
Recreation
Instructors
Teach or instruct individuals or groups for
the primary purpose of recreation, rather than
for an occupational objective, educational
attainment, competition, or fitness.
Diving instructor, ski
instructor, tennis teacher,
surfing instructor
53-2012
Transportation and Delivery
801
Parking and
Valet Attendants
Park vehicles or issue tickets for
customers in a parking lot or garage. May
park or tend vehicles in environments
such as a hotel or restaurant. May collect
fee.
Parking garage attendant,
valet parker
53-6021
802
Taxi and
Rideshare
Drivers and
Chauffeurs
Drive a motor vehicle to transport
passengers on a planned or unplanned
basis.
Cab driver, personal driver53-3054
803
Shuttle Drivers
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.
Airport shuttle driver, hotel
shuttle driver, rental car
shuttle driver
53-3053

Bulletin No. 2025–42 521 October 14, 2025
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC
Occupation
TitleTTOC Occupation Description
TTOC Illustrative
Examples
Related Standard
Occupational
Classification
(SOC) System
Code(s)
1
804
Goods Delivery
People
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.
Pizza delivery driver,
grocery delivery driver, floral
delivery, bicycle courier,
package delivery person,
appliance delivery driver,
furniture delivery person
53-3031
805
Personal Vehicle
and Equipment
Cleaners
Wash or otherwise clean personal
vehicles, machinery, and other
equipment. Use such materials as water,
cleaning agents, brushes, cloths, and
hoses.
Car wash attendant, auto
detailer, boat waxer
53-7061
806
Private and
Charter Bus
Drivers
Drive bus or motor coach for charters or
private carriage. May assist passengers
with baggage.
Motor coach bus driver, tour
bus driver
53-3052
807
Water Taxi
Operators and
Charter Boat
Workers
Operate water taxi boats or provide
services to passengers on private
charter boats. May assist in navigational
activities.
Water taxi captain, air
boat operator, charter boat
deckhand, charter boat
steward
53-5022
808
Rickshaw,
Pedicab, and
Carriage Drivers
Operate rickshaw, pedicab, or carriage to
transport passengers.
Horse drawn carriage driver,
bike taxi driver
53-6099
809
Home Movers
Manually move furniture, music
instruments, art, antiques, boxes, luggage,
or other materials to or from a home or
dwelling.
Furniture mover, packer,
piano mover, art mover
53-7062
1. “Related Standard Occupational Classification (SOC) System Code(s)” are the code(s) from the 2018 Standard Occupational
Classification System, as published by the Executive Office of the President, Office of Management and Budget, that most closely
correlate(s) to the Treasury Tipped Occupation Code (TTOC).
(g) Termination. No deduction shall be
allowed under this section for any taxable
year beginning after December 31, 2028.
(h) Applicability date. This section
applies to taxable years beginning after
December 31, 2024.
Edward T. Killen,
Acting Chief Tax Compliance Officer.
(Filed by the Office of the Federal Register Septem-
ber 19, 2025, 8:45 a.m., and published in the issue
of the Federal Register for September 22, 2025, 90
FR 45340)

October 14, 2025 522 Bulletin No. 2025–42
Notice of Proposed
Rulemaking
Guidance Regarding
Certain Matters Relating
to Nonrecognition
of Gain or Loss in
Corporate Separations,
Incorporations, and
Reorganizations; Multi-Year
Reporting Requirements
for Corporate Separations
and Related Transactions;
Withdrawal
REG-112261-24;
REG-116085-23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Withdrawal of notices of pro-
posed rulemaking.
SUMMARY: This document withdraws a
notice of proposed rulemaking containing
proposed regulations relating to corporate
separations, incorporations, and reorgani-
zations qualifying, in whole or in part, for
nonrecognition of gain or loss. This docu-
ment also withdraws a notice of proposed
rulemaking containing proposed regula-
tions that would have required multi-year
tax reporting for corporate separations and
related transactions. The proposed regu-
lations would have affected corporations
and their shareholders and security hold-
ers.
DATES: The notices of proposed
rulemaking published in the Federal Reg-
ister on January 16, 2025 (90 FR 5220 and
90 FR 4687), are withdrawn as of Septem-
ber 30, 2025.
ADDRESSES: Send paper submissions
to CC:PA:01:PR (REG-112261-24 and
REG-116085-23), Room 5203, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
All public comments received with respect
to the notices of proposed rulemaking
(REG-112261-24 and REG-116085-23)
are available to review at https://www.reg-
ulations.gov by searching the Docket ID
numbers (IRS-2025-0017 and IRS-2025-
0015, respectively).
FOR FURTHER INFORMATION
CONTACT: Justin R. Du Mouchel at
(202) 317-6975 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On January 16, 2025, the Treasury
Department and the IRS published a notice
of proposed rulemaking (REG-112261-
24) in the Federal Register (90 FR 5220)
setting forth proposed regulations under
sections 355, 357, 361, and 368 of the
Code regarding certain matters relating
to corporate separations, incorporations,
and reorganizations qualifying, in whole
or in part, for nonrecognition of gain or
loss (proposed technical regulations) and
requesting public comment.
On the same date, the Treasury Depart-
ment and the IRS also published a notice
of proposed rulemaking (REG-116085-
23) in the Federal Register (90 FR 4687)
setting forth proposed regulations that
would require multi-year tax reporting for
corporate separations and related trans-
actions (proposed reporting regulations).
The proposed reporting regulations were
consistent with recommendations set
forth in a report published by the Treasury
Inspector General for Tax Administration
titled “A Strategy Is Needed to Assess the
Compliance of Corporate Mergers and
Acquisitions with Federal Tax Require-
ments,” Ref. No. 2019-30-050 (Sept. 5,
2019).
The Treasury Department and the IRS
received several comments in response
to the proposed technical regulations and
the proposed reporting regulations, which
generally were critical of the proposed
guidance. In response to the comments
received, the Treasury Department and the
IRS are withdrawing the proposed regu-
lations.
Drafting Information
The principal author of this notice is
Justin R. Du Mouchel of the Office of
Associate Chief Counsel (Corporate).
However, other personnel from the Trea-
sury Department and the IRS participated
in its development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Withdrawal of Proposed Amendments
to the Regulations
Under the authority of 26 U.S.C. 7805,
the notices of proposed rulemaking (REG-
112261-24 and REG-116085-23) that
were published in the Federal Register on
January 16, 2025 (90 FR 5220 and 90 FR
4687), are withdrawn.
Edward T. Killen,
Acting Chief Tax Compliance Officer.
(Filed by the Office of the Federal Register Septem-
ber 29, 2025, 8:45 a.m., and published in the issue
of the Federal Register for September 30, 2025, 90
FR 46776)

Bulletin No. 2025–42 i October 14, 2025
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

October 14, 2025 ii Bulletin No. 2025–42
Numerical Finding List
1
Bulletin 2025–42
Announcements:
2025-19, 2025-29 I.R.B. 191
2025-20, 2025-31 I.R.B. 271
2025-21, 2025-32 I.R.B. 312
2025-24, 2025-36 I.R.B. 359
2025-25, 2025-36 I.R.B. 360
2025-26, 2025-40 I.R.B. 444
Notices:
2025-32, 2025-27 I.R.B. 1
2025-33, 2025-27 I.R.B. 4
2025-34, 2025-27 I.R.B. 6
2025-35, 2025-27 I.R.B. 8
2025-31, 2025-28 I.R.B. 14
2025-36, 2025-30 I.R.B. 192
2025-37, 2025-30 I.R.B. 198
2025-40, 2025-31 I.R.B. 266
2025-39, 2025-32 I.R.B. 308
2025-28, 2025-34 I.R.B. 316
2025-41, 2025-34 I.R.B. 325
2025-42, 2025-36 I.R.B. 351
2025-43, 2025-36 I.R.B. 356
2025-44, 2025-37 I.R.B. 386
2025-45, 2025-37 I.R.B. 388
2025-38, 2025-38 I.R.B. 392
2025-47, 2025-40 I.R.B. 441
2025-51, 2025-41 I.R.B. 448
2025-52, 2025-41 I.R.B. 474
2025-54, 2025-41 I.R.B. 479
Proposed Regulations:
REG-125710-18, 2025-30 I.R.B. 263
REG-107459-24, 2025-32 I.R.B. 313
REG-132805-17, 2025-35 I.R.B. 342
REG-108822-25, 2025-36 I.R.B. 361
REG-129260-16, 2025-39 I.R.B. 410
REG-108673-25, 2025-42 I.R.B. 494
REG-110032-25, 2025-42 I.R.B. 495
REG-112261-24; REG-116085-23, 2025-42
I.R.B. 522
Revenue Procedures:
2025-22, 2025-30 I.R.B. 200
2025-24, 2025-31 I.R.B. 273
2025-25, 2025-32 I.R.B. 311
2025-26, 2025-33 I.R.B. 315
2025-28, 2025-38 I.R.B. 393
2025-30, 2025-42 I.R.B. 489
Revenue Rulings:
2025-13, 2025-28 I.R.B. 11
2025-14, 2025-32 I.R.B. 300
2025-15, 2025-32 I.R.B. 302
2025-16, 2025-35 I.R.B. 342
2025-17, 2025-36 I.R.B. 349
2025-18, 2025-37 I.R.B. 365
2025-19, 2025-41 I.R.B. 445
2025-20, 2025-41 I.R.B. 447
Treasury Decisions:
10021, 2025-31 I.R.B. 264
10031, 2025-32 I.R.B. 304
10033, 2025-40 I.R.B. 411
10035, 2025-42 I.R.B. 484
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2025–27 through 2025–52 is in Internal Revenue Bulletin
2025–52, dated December 22, 2025.

Bulletin No. 2025–42 iii October 14, 2025
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2025–42
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2025–27 through 2025–52 is in Internal Revenue Bulletin
2025–52, dated December 22, 2025.

Internal Revenue Service
Washington, DC 20224
Official Business
Penalty for Private Use, $300
INTERNAL REVENUE BULLETIN
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