Internal Revenue Bulletin 2026-18 (PDF rendition): IRS Announcements

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Bulletin No. 2026–18
April 27, 2026
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
Announcement 2026-9, page 881.
The Office of Professional Responsibility (OPR) announces
recent disciplinary sanctions imposed on attorneys, certi-
fied public accountants, enrolled agents, enrolled actuaries,
enrolled retirement plan agents, and appraisers. The OPR also
announces when certain unenrolled, unlicensed tax return
preparers (individuals who are not enrolled to practice before
the Internal Revenue Service (IRS)) and are not licensed as
attorneys or certified public accountants) have been disci-
plined. Licensed or enrolled practitioners are subject to the
regulations governing practice before the IRS, which are set
out in Title 31, Code of Federal Regulations (C.F.R.), Subtitle
A, Part 10, and which are released as Treasury Department
Circular No. 230. The regulations prescribe the duties and
restrictions relating to such practice and prescribe the dis-
ciplinary sanctions for violating the regulations. Unenrolled/
unlicensed return preparers who choose to participate in the
IRS’s voluntary Annual Filing Season Program (AFSP) are sub-
ject to the guidance in Revenue Procedure 2014-42, which
governs a preparer’s eligibility to represent taxpayers before
the IRS in examinations of tax returns the preparer both pre-
pared for the taxpayer and signed as the preparer. Addition-
ally, unenrolled/unlicensed return preparers who participate
in the AFSP agree to be subject to the duties and restrictions
in Circular 230, including the restrictions on incompetence
or disreputable conduct.
EMPLOYEE PLANS
Notice 2026-26, page 878.
This notice sets forth updates on the corporate bond monthly
yield curve, the corresponding spot segment rates for March
2026 used under § 417(e)(3)(D), the 24-month average seg-
ment rates applicable for April 2026, and the 30-year Trea-
sury rates, as reflected by the application of § 430(h)(2)(C)
(iv).
EMPLOYEE TAX
TD-10044, page 840.
Public Law 119-21, commonly known as the One, Big, Beau-
tiful Bill Act (OBBBA) adds new section 224 to the Internal
Revenue Code, which provides a deduction for “qualified tips”
that are reported on certain IRS returns and forms. The stat-
ute requires that the Secretary of the Treasury publish a list of
occupations that customarily and regularly received tips on
or before December 31, 2025, and establish other require-
ments concerning qualified tips. These final regulations iden-
tify occupations that customarily and regularly received tips
on or before December 31, 2024, define “qualified tips,”
and provide guidance on other requirements of section 224.
TD10044. Published April 13, 2026.
EXCISE TAX
REG-114499-25, page 883.
Section 4475 imposes a one percent tax on remittance
transfers made after December 31, 2025, for which the
sender provides cash, a money order, a cashier’s check, or
other similar physical instrument to the remittance transfer
provider. This Notice of Proposed Rulemaking contains pro-
posed rules relating to the imposition and calculation of that
excise tax.
Finding Lists begin on page ii.

The IRS Mission
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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
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stantive rulings necessary to promote a uniform application
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Revenue rulings represent the conclusions of the Service
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Rulings and procedures reported in the Bulletin do not have the
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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.
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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.
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To the extent practicable, pertinent cross references to these
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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.
April 27, 2026 Bulletin No. 2026–18

Part I
26 CFR 1.224-1
TD 10044
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Occupations that
Customarily and Regularly
Received Tips; Definition of
Qualified Tips
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final rule.
SUMMARY: This document contains
final regulations that identify occupations
that customarily and regularly received
tips on or before December 31, 2024,
and provide a definition of qualified tips
for purposes of the income tax deduction
for qualified tips. These regulations affect
individuals who receive tips as part of
their occupation.
DATES: Effective date: These final regu-
lations are effective on June 12, 2026.
Applicability date: For date of applicabil-
ity, see § 1.224-1(j).
FOR FURTHER INFORMATION
CONTACT: Stephanie Caden or Andrew
Holubeck at (202) 317-4774.
SUPPLEMENTARY INFORMATION:
Authority
These final regulations contain amend-
ments to the Income Tax Regulations (26
CFR part 1) under section 224 of the Inter-
nal Revenue Code (Code) related to the
deduction for qualified tips. These final
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, Beauti-
ful Bill Act (OBBBA), which requires that,
not later than 90 days after the date of the
enactment 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 reg-
ulations 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 pre-
scribe 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.
The final 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 regulations as may be necessary by rea-
son of any alteration of law in relation to
Internal Revenue.
Background
This document contains amendments
to 26 CFR part 1 under section 224 of
the Code relating to the deduction from
income for qualified tips.
Under section 61(a) of the Code,
amounts received by individuals as tips
are included in gross income and sub-
ject to income tax. Treasury 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) of the Code defines tax-
able income for taxpayers who itemize
their deductions as gross income minus
allowable deductions (other than the stan-
dard deduction). Section 63(b) provides
that, in the case of an individual who does
not elect to itemize deductions for the tax-
able year, taxable 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) of the Code,
or are reported by the taxpayer on Form
4137, Social Security and Medicare Tax
on Unreported Tip Income (or successor).
Section 224(b)(1) limits this deduction to
an amount not to exceed $25,000 in a tax-
able year. Section 224(b)(2) further limits
the amount of the deduction based on a tax-
payer’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 of the Code. 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
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.
April 27, 2026 840 Bulletin No. 2026–18

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 quali-
fied tips are taken into account under sec-
tion 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 are received in the course of a
trade or business that is a specified ser-
vice 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 of the Code), sec-
tion 224 applies only if the taxpayer and
the taxpayer’s spouse file a joint return for
the taxable year. That is, the deduction is
not available for a taxpayer who is mar-
ried 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 regularly
received tips on or before December 31,
2024, (“List of Occupations that Receive
Tips”) 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,
entitled “The One Big Beautiful Bill: Leg-
islation 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.
A notice of proposed rulemaking and
a notice of public hearing (REG-110032-
25) were published in the Federal Reg-
ister (90 FR 45340) on September 22,
2025, proposing regulations under section
224 that identify occupations that cus-
tomarily and regularly received tips on
or before December 31, 2024, and that
provide a definition of “qualified tips” for
purposes of the income tax deduction for
qualified tips under section 224. A public
hearing was held telephonically on Octo-
ber 23, 2025, and comments responding
to the notice of proposed rulemaking were
received.
On November 5, 2025, the Treasury
Department and the IRS released Notice
2025-62, providing penalty relief for cer-
tain 2025 information reporting related
to the section 224 deduction for qualified
tips. In addition, Notice 2025-69, released
on November 21, 2025, provides guid-
ance regarding how individuals satisfy the
requirements for the section 224 deduction
for qualified tips received in 2025. Notice
2025-69 also provides transition relief for
taxpayers regarding the requirement that
qualified tips must not be received in the
course of a specified service trade or busi-
ness.
Summary of Comments and
Explanation of Revisions
This Summary of Comments and
Explanation of Revisions summarizes
the proposed regulations, all the substan-
tive comments submitted in response to
the proposed regulations, and revisions
adopted by these final regulations. The
Treasury Department and the IRS received
322 written comments in response to the
proposed regulations. The comments are
available for public inspection at https://
www.regulations.gov or upon request.
After full consideration of the comments
received, these final regulations adopt
the proposed regulations with modifica-
tions in response to such comments as
described in this Summary of Comments
and Explanation of Revisions.
Many of the comments received were
unrelated to tax law or otherwise outside
the scope of the proposed regulations.
Comments expressing general approval
or disapproval of section 224 or the
OBBBA, recommending statutory revi-
sions, and addressing issues that are out-
side the scope of this rulemaking (such as
comments relating to IRS forms, report-
ing procedures, and enforcement) are gen-
erally not addressed in this Summary of
Comments and Explanation of Revisions
section or adopted in these final regula-
tions. Guidance on claiming the deduction
for 2025 was provided in Notice 2025-69,
and additional guidance on information
reporting and claiming the deduction in
subsequent years will also be provided in
the instructions to the relevant forms.
Some commenters requested a public
hearing or requested to speak at the pub-
lic hearing, which was held telephonically
on October 23, 2025. Other comment-
ers requested that the comment period
be extended for at least another 30 days.
Bulletin No. 2026–18 841 April 27, 2026

April 27, 2026 842 Bulletin No. 2026–18
To ensure that these final regulations are
issued in time to provide guidance to tax-
payers filing their 2025 income tax returns,
the Treasury Department and the IRS did
not extend the comment period, and the
comment period for the proposed regu-
lations ended on October 22, 2025; how-
ever, the Treasury Department and the IRS
considered all comments received, includ-
ing comments submitted after the close
of the comment period that were received
up to the point in the rulemaking pro-
cess at which revisions to the regulatory
text could no longer practicably be made.
Comments received after that point could
not be fully evaluated or incorporated due
to the advanced stage of the drafting pro-
cess. In addition to making modifications
in response to the comments received, the
final regulations also include non-substan-
tive grammatical or stylistic changes to
the proposed regulations.
1. Comments on the Methodology Used
to Construct the List of Occupations that
Receive Tips
Table 1 in § 1.224-1(f) of the proposed
regulations contains the proposed list of
occupations that customarily and regularly
received tips (List of Occupations that
Receive Tips) on or before December 31,
2024, that section 70201(h) of the OBBBA
instructed the Secretary to provide. The
Treasury Department and the IRS com-
piled the proposed List of Occupations
that Receive Tips based on a review of IRS
data, legislative history, and survey data
regarding tipped occupations and the pres-
ence of certain factors demonstrating that
those occupations customarily and regu-
larly received tips. Because the Code does
not define the phrase “customarily and reg-
ularly,” the Treasury Department and the
IRS looked to dictionary definitions and
other statutory provisions, including the
provisions of the Fair Labor Standards Act
(FLSA), for guidance.
With these parameters in mind,
the Treasury Department and the IRS
reviewed data collected from 2023 Forms
W-2, Wage and Tax Statement,
3
that
reported tips in box 7 on the form (Social
Security tips); Forms 4137 that reported
tips on line 4; and corresponding income
tax returns (Forms 1040). The Treasury
Department and the IRS identified occu-
pations listed on the income tax returns (as
reported on page 2 of Form 1040 next to
the taxpayer’s signature) described in the
prior sentence as having customarily and
regularly received tips based on the per-
centage of taxpayers who reported at least
$100 in annual tip income within a given
occupation as reported on Form 1040.
To account for limitations in this data,
including the fact that the data pool con-
sisted only of individuals working as
employees and relied on self-reported and
non-standardized occupation descriptions,
the Treasury Department and the IRS also
evaluated occupations identified in the
Gaming Industry Tip Compliance Agree-
ment (GITCA) program, a voluntary tip
reporting program for the gaming industry
run by the IRS, and other similar IRS tip
reporting programs. The Treasury Depart-
ment and the IRS also consulted the House
Budget Committee report on the OBBBA,
H. Rept. 119-106, at 1502 (2025), for
additional information regarding occu-
pations that traditionally and customarily
received tips on or before December 31,
2024. Finally, the Treasury Department
and the IRS analyzed survey data from the
Panel Study of Income Dynamics (PSID)
that included information on occupations
and tip income of both employees and
self-employed individuals. The PSID is
a nationally representative survey con-
ducted by the University of Michigan.
In organizing the proposed List of
Occupations that Receive Tips, the Trea-
sury Department and the IRS created a
new categorization system based on the
2018 Standard Occupation Classification
(SOC Code) system, called the Treasury
Tipped Occupation Code (TTOC) sys-
tem. The SOC Code system is a Federal
statistical standard used by Federal agen-
cies to classify workers into occupational
categories for the purpose of collecting,
calculating, or disseminating data. It is
published by the Executive Office of the
President, Office of Management and
Budget (OMB).
Many commenters addressed the meth-
odology used to create the proposed List
of Occupations that Receive Tips. One
commenter suggested that the IRS review
public comments submitted in response
to the Bureau of Labor Statistics’ Notice
of solicitation of comments to revise the
SOC for 2028 (BLS-2024-0001), pub-
lished in the Federal Register on June
12, 2024 (89 FR 49911), when consider-
ing other occupations to add to the list.
Another commenter suggested that the
primary source used to create the list,
occupations reported on an income tax
return, does not reflect any historical or
traditional information about tipped occu-
pations. One commenter noted that many
of the occupations on the list, especially
those that do not have regular interaction
with the public like cooks, dishwashers,
and prep cooks, are not historically known
to receive tips.
One commenter suggested that the
Treasury Department and the IRS narrow
the list by focusing on the frequency or
prevalence of tip income. The commenter
noted that the definitions of customarily
and regularly discussed in the proposed
regulations were a “logical starting point,”
but questioned whether these definitions
were applied in the methodology beyond
excluding workers reporting less than
$100 in tips per year. The commenter ques-
tioned why a $100 annual threshold was
selected instead of a $30/month threshold,
which is used in the FLSA context. One
commenter argued that the proposed stan-
dard of “more often than occasionally”
conflicted with the $100 annual thresh-
old. Several commenters noted that the
proposed regulations do not explain how
the additional sources, outside of income
tax returns, were used to add occupations
to the list and that the addition of certain
occupations is not supported by data. Two
commenters requested more transparency
as to how the list was created, including
providing transparent categorization stan-
dards, written job descriptions, and stated
evidence thresholds for inclusion.
Finally, a few commenters noted
that eligibility in a particular occupation
should be based on the nature and sub-
3
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 reviewed preliminary data for the 2024 tax year and anticipated
that final 2024 data would be substantially similar to 2023 data.

Bulletin No. 2026–18 843 April 27, 2026
stance of the services provided in the
occupation, rather than the context or
industry in which they are provided and
that the list should be revised to focus
more on the nature of occupations rather
than on the industry or type of service or
product provided.
One commenter stated that the occupa-
tions designated by the Treasury Depart-
ment and the IRS as eligible for no taxes
on tips appropriately captured traditional
tipped occupations and requested that
none of these occupations be cut from
the final rule. Another commenter noted
that the proposed List of Occupations
that Receive Tips accurately reflects those
intended by Congress to receive the tax
deduction.
Section 70201(h) of the OBBBA
requires the Treasury Department and the
IRS to publish a list of occupations that
customarily and regularly received tips
on or before December 31, 2024. This
provision did not dictate a specific pro-
cess for creating this list. In constructing
a methodology for creating the proposed
List of Occupations that Receive Tips, the
Treasury Department and the IRS used
traditional tools of statutory construc-
tion, including dictionary definitions, to
clarify what it means for an occupation
to customarily and regularly receive tips.
In compiling the proposed list, the Trea-
sury Department and the IRS needed a
source of occupational data from which
to select those occupations that custom-
arily and regularly received tips on or
before December 31, 2024, to avoid rely-
ing solely on anecdotal information. The
Treasury Department and the IRS uti-
lized the best comprehensive data source
available to them—occupations reported
on 2023 Federal income tax returns,
4
the
latest tax year for which complete infor-
mation was available at the time the pro-
posed regulations were published. The
many different occupations that taxpayers
identified on the “Your occupation” line
on their income tax returns were analyzed
based on the SOC Code associated with
the occupation. The SOC Codes associ-
ated with income tax returns with accom-
panying 2023 Forms W-2, Wage and Tax
Statement, and Forms 4137, Social Secu-
rity and Medicare Tax on Unreported Tip
Income, reporting more than $100 per
year in tip income were identified and
compiled into a preliminary list. For every
SOC Code on this list, data on reported
tips, including the percentage of individ-
uals within that SOC Code who reported
tips (on associated Forms W-2 and 4137),
was determined. Thus, occupational data
from income tax returns was calculated
with respect to the related SOC Code, not
necessarily for the occupation listed on
the individual income tax return. Next, the
Treasury Department and the IRS created
the TTOC system for organizing the pro-
posed List of Occupations that Receive
Tips. This process sometimes involved
combining or dividing certain SOC Codes
to describe the occupations in a user-
friendly manner and to remove non-tipped
occupations that were included under
the same SOC Code as tipped occupa-
tions. The proposed regulations identified
some occupations as distinct categories,
while other occupations were embedded
in broader categories (for example, eye-
lash technicians, as discussed later, were
included implicitly under TTOC 603 Bar-
bers, Hairdressers, Hairstylists, or Cosme-
tologists or TTOC 606 Eyebrow Techni-
cians).
As explained in the preamble to the
proposed regulations and noted earlier, the
proposed List of Occupations that Receive
Tips and its related data on reported tips
had limitations. Tipped occupations with
a large proportion of individuals working
in those occupations as independent con-
tractors may have been underrepresented
in the list, since the list only included
employees reporting tips.
5
In addition,
in certain cases, tipped occupations were
grouped in the same SOC Code as non-
tipped occupations, resulting in a lower
percentage of individuals reporting tips
for that SOC Code than for the occupation
within the SOC Code that was the tipped
occupation.
As described earlier, other information
sources, including occupations identified
in the GITCA program, the House Bud-
get Committee report on the OBBBA, and
the PSID, were consulted to help address
some of the limitations of the list. How-
ever, many of these sources were not
exhaustive lists of tipped occupations and
others were based on data not as com-
prehensive and statistically significant as
income tax return data.
While the data and information the
Treasury Department and the IRS used to
develop the proposed List of Occupations
that Receive Tips had limitations, it was
and continues to be the best data available
for this purpose. When compiling the List
of Occupations that Receive Tips in the
proposed and final regulations, the Trea-
sury Department and the IRS reviewed
preliminary data available for tax year
2024. This preliminary data was updated
between the issuance of the proposed reg-
ulations and these final regulations, but
in both cases it is substantially similar to
the tax year 2023 data and did not alter
the list. None of the commenters provided
alternatives for reliable data sources, nor
did they provide alternative methodolo-
gies for constructing the List of Occupa-
tions that Receive Tips. For these reasons,
the Treasury Department and the IRS used
the same methodology and data from the
proposed regulations (including updated
preliminary 2024 tax return information)
to develop the List of Occupations that
Receive Tips in the final regulations.
In response to the comments received
regarding occupations not specifically
identified in the proposed list, the Trea-
sury Department and the IRS reviewed
the same available data at both the SOC
Code level and the more granular level
of the occupations listed on individual
income tax returns.
6
Where the data sup-
ported a modification to the list, the Trea-
sury Department and the IRS expanded or
refined the list of occupations in the final
4
The Treasury Department and the IRS reviewed preliminary data for the 2024 tax year and anticipated that final 2024 data would be substantially similar to 2023 data.
5
Only employees receive Forms W-2, which include separate tip reporting. Similarly, only employees report their tips using Form 4137. Independent contractors do not separately report
tips on their income tax returns, and the information returns received by independent contractors prior to 2026, such as Forms 1099-MISC, did not separately report tips. Thus, no tax return
information was available concerning tips received by independent contractors. Beginning in tax year 2026, information returns furnished to both independent contractors and employees
will separately report certain tips.
6
The Treasury Department and the IRS reviewed the data at the more granular level of occupations listed on individual income tax returns to verify that the SOC Code grouping did not
exclude occupations based on inaccurate data.

April 27, 2026 844 Bulletin No. 2026–18
regulations to more accurately identify
occupations that customarily and regularly
received tips on or before December 31,
2024. The specific comments requesting
additional occupations and the changes
made in response are described later in
this preamble.
Concerning comments asking that the
occupations on the List of Occupations
that Receive Tips be based on the nature
and substance of the services provided in
the occupation rather than the context or
industry in which they are provided, gen-
erally the names and descriptions of the
occupations on the List of Occupations
that Receive Tips are based on the nature
of the service provided in that occupation.
The groupings of the various occupa-
tions under industry-related headings like
“Beverage and Food Service” is solely for
purposes of organizing the list. However,
in a few situations the industry context in
which an occupation operates changes the
nature of the occupation in comparison to
other industrial contexts to such an extent
that it becomes a separate occupation. For
instance, “desk clerks” in the hospitality
industry provide a range of very specific
services to hotel, motel, and resort guests
such that it is a distinct occupation from
desk clerks in other industry contexts.
Some commenters expressed concern
that several of the occupations on the list
are not considered occupations in which
employees “customarily and regularly”
receive tips under the FLSA. These com-
menters were concerned that the inconsis-
tencies might cause confusion. One com-
menter asked for more clarification as to
how the List of Occupations that Receive
Tips interacts with FLSA rules.
As the Treasury Department and IRS
explained in the preamble to the proposed
regulations, the FLSA uses the phrase
“customarily and regularly” 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 cus-
tomarily and regularly receives more than
$30 a month in tips.” 29 U.S.C. 203(t).
The FLSA further 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
regularly 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 regu-
larly’ 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 occupa-
tions in which employees customarily and
regularly receive tips within the meaning
of the FLSA. For instance, DOL guidance
interpreting the FLSA states that servers,
counter personnel who serve customers,
bellhops, bussers (that is, server helpers),
and service bartenders are examples of
occupations that “customarily and reg-
ularly receive tips” for purposes of the
FLSA.
10
The occupations DOL has iden-
tified as occupations in which employees
customarily and regularly receive tips in
its guidance are not meant to be exhaus-
tive and do not control for purposes of
section 224 of the Code.
There are many differences between
the specific language, purpose, and history
of the FLSA tip provisions versus the lan-
guage, purpose, and history of the deduc-
tion for qualified tips under section 224
of the Code. Among other things, while
the text of the FLSA is expressly limited
to occupations in which an employee
receives “more than $30 a month in tips,”
section 224 contains no such limitation,
and the Treasury Department and IRS
have not utilized this threshold for pur-
poses of limiting the List of Occupations
that Receive Tips.
In addition, while the FLSA contem-
plates that an employee must have some
level of customer interaction to “custom-
arily and regularly” receive tips,
11
section
224(d)(3) provides that for purposes of the
deduction for qualified tips under section
224, cash tips include, in the case of an
employee, tips received through a tip shar-
ing arrangement. Accordingly, the Trea-
sury Department and IRS included in the
proposed List of Occupations that Receive
Tips some occupations that may not have
extensive, or any, customer interaction,
and in which employees have not been
considered to customarily and regularly
receive tips under the FLSA, including
dishwashers and cooks. The final regula-
tions take the same approach.
In addition to the differences dis-
cussed above, section 224 and the FLSA
serve different purposes. The purpose of
section 224 is to provide a deduction for
individuals who receive tips, while the
FLSA, in relevant part, governs the con-
ditions under which employers may take
a credit towards their wage obligations for
employees who receive tips. Given that
section 224 of the Code and the FLSA tip
provisions are entirely different statutory
provisions with different histories and
purposes, the inclusion of occupations as
tipped occupations under section 224 has
no bearing or effect on what occupations
are considered tipped for purposes of the
FLSA and any differences should not be a
source of confusion.
Commenters also asked how the IRS
will determine whether a particular tax-
payer’s occupation is on the List of Occu-
pations that Receive Tips in the regula-
tions when it is not listed as an illustrative
example. One commenter asked that the
IRS provide transparency as to how the
7
See 90 FR at 45344. Under the FLSA, so long as certain criteria are satisfied, employers can take a tip credit to bring a tipped employee’s total wages up to the Federal minimum wage amount.
See 29 U.S.C. 203(m)(2)(A)(i)-(ii). Currently, the federal minimum wage is $7.25 per hour, and the maximum tip credit amount is $5.12.
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 December 18, 2025, from https://www.dol.gov/agencies/whd/field-operations-handbook; see also WHD Opinion Letter FLSA2025-
03 (Sept. 30, 2025); 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) (con-
cluding 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 Montano v. Montrose Rest. Assocs., 800 F.3d 186, 189-194 (5th Cir. 2015) (holding that a factfinder could determine that an employee did not “customarily and regularly receive tips,”
despite the fact that the employer included him in a tip pool).

Bulletin No. 2026–18 845 April 27, 2026
IRS intends to interpret whether an occu-
pation is on the List of Occupations that
Receive Tips. Taxpayers wishing to claim
the deduction and entities responsible
for information reporting are primarily
responsible for ensuring their occupation
is on the List of Occupations that Receive
Tips. The list, in most instances, is suffi-
ciently specific to provide clarity. The IRS
intends to interpret the occupations on the
list in a fair and impartial manner con-
sistent with their commonly understood
meaning.
Several commenters asked that the
List of Occupations that Receive Tips be
a non-exhaustive one (one commenter
stating that an exclusive list was not sup-
ported by statute). One commenter sug-
gested instituting a safe harbor provision
for claiming deductions for non-listed
occupations and setting up a semi-annual
review process for adding new occupa-
tions to the list. Another commenter sug-
gested listing the occupations in a revenue
procedure and updating the revenue pro-
cedure with additional occupations based
on more current data, if necessary.
Because section 224(d)(1) provides
that “[t]he term ’qualified tips’ means cash
tips received by an individual in an occu-
pation which customarily and regularly
received tips on or before December 31,
2024, as provided by the Secretary,” only
tips received in an occupation that is on
the List of Occupations that Receive Tips
“provided by the Secretary” are qualified
tips. In addition, the statutory language
does not contemplate an evolving or
updated List of Occupations that Receive
Tips but rather describes one list of occu-
pations that customarily and regularly
received tips at a specific point in time –
on or before December 31, 2024. Through
the notice of proposed rulemaking notice
and comment process, interested parties
were provided the opportunity to suggest
additions and other edits to the List of
Occupations that Receive Tips in the pro-
posed regulations. As discussed later, the
Treasury Department and the IRS made
several revisions in response to the com-
ments. However, the statute requires that
the Secretary provide a comprehensive list
as of a fixed point in time. For this reason,
the final regulations contain the require-
ment from the proposed regulations that
only qualified tips received in connection
with the occupations on the List of Occu-
pations that Receive Tips are eligible for
the deduction in section 224(a). However,
note that while the List of Occupations
that Receive Tips is exhaustive, the illus-
trative examples of occupations that fit
within each TTOC are not. There may be
other occupations that fall within a TTOC
that are not listed as an illustrative exam-
ple.
2. Comments Concerning the List of
Occupations that Receive Tips
Several commenters indicated their
support for specific occupations included
on the proposed List of Occupations that
Receive Tips, including occupations in
the beauty industry, app-based delivery
drivers, and digital content creators. Many
commenters requested that additional
occupations be added to the List of Occu-
pations that Receive Tips. Several of the
requested additions were for occupations
that were already included in the proposed
List of Occupations that Receive Tips,
either as their own category or specifically
mentioned as an illustrative example in
an existing category, such as pet groom-
ers, digital content creators, dancers, boat
workers, pool cleaners and yoga instruc-
tors. Those occupations remain on the
final list.
A. Comments requesting additional
details or clarification for occupations
already on the List of Occupations that
Receive Tips
Some commenters requested that addi-
tional occupations be included as illustra-
tive examples in the categories in which
they belong. The illustrative examples
were provided to assist taxpayers, but they
are not an exhaustive list of every occu-
pation that fits under a TTOC occupation
category. For example, under the TTOC
for Travel Guides (705), cruise director
and river expedition guide are listed as
illustrative examples. But other travel
guides, such as a hiking guide or urban
ghost tour guide, would also be included
in this TTOC, even though they are not
listed as illustrative examples.
One commenter asked about including
“table game supervisors” in casinos on
the List of Occupations that Receive Tips.
The SOC Code for “First-Line Supervi-
sors of Gambling Service Workers” (39-
1013), whose duties can include planning
and organizing activities and services for
guests in hotels and casinos, was included
in the proposed List of Occupations that
Receive Tips under TTOC 201, Gambling
Dealers, and continues to be included
under this category in the final regulations.
Thus, table game supervisors are covered
by the Gambling Dealers category.
One commenter requested that residen-
tial building staff, such as doormen, be
added to the list. Most residential building
staff are covered by the categories in the
proposed List of Occupations that Receive
Tips. For example, if a residential building
has a concierge, they are already included
in the “Concierges” category (TTOC
302). Residential building maintenance
workers fit under the “Home Maintenance
and Repair Workers” (TTOC 401). And
finally, doormen fit as part of the “Bag-
gage Porters and Bellhops” (TTOC 301).
However, to clarify that this category can
include workers who do not work in a
hotel or motel, “doorman” has been added
to the list of illustrative examples for this
category in the final regulations.
Another commenter asked that eyelash
technicians be added to the List of Occu-
pations that Receive Tips. The proposed
List of Occupations that Receive Tips
included “Eyebrow Threading and Wax-
ing Technicians” (TTOC 606). For clar-
ity, in the final regulations this category
is revised to read “Eyebrow and Eyelash
Technicians,” and additions were made to
the description to include eyelash techni-
cians.
One commenter asked that a win-
ery tasting room server be added to the
List of Occupations that Receive Tips.
The proposed List of Occupations that
Receive Tips included “Food Servers,
Non-restaurant” (TTOC 103), and a win-
ery tasting room server is covered by this
category. The final regulations clarify this
by amending the category name to “Food
and Beverage Servers, Non-restaurant”
(newly added language shown in italics).
One commenter asked that the phrase
“over established routes or within an
established territory” be removed from
the description of “Goods Delivery Peo-
ple” (TTOC 804) to clarify that app-based
delivery workers (also called gig economy

April 27, 2026 846 Bulletin No. 2026–18
delivery drivers) are covered by that cate-
gory. The proposed illustrative examples
focused on the service being performed
(e.g., pizza delivery, package delivery)
rather than the method through which
the service was requested. The Treasury
Department and the IRS agree that adding
“app/platform based delivery person” to
the illustrative list would be helpful. The
final regulations include this clarification
in both “Goods Delivery People” (TTOC
804) and “Taxi and Rideshare Drivers and
Chauffeurs” (TTOC 802). In addition,
the phrase “over established routes or
within an established territory” has been
removed from the description of “Goods
Delivery People” in the final regulations.
One commenter asked that more detail
be provided for the various occupations in
the “Recreation and Instruction” group-
ing to encompass the full range of out-
door recreation guiding and instructional
activities, and more specifically that “Tour
Guides” and “Travel Guides” expressly
include outdoor, wilderness, and expedi-
tion guiding services. Although outdoor
recreation occupations are addressed
in “Travel Guides” (TTOC 705) (river
expedition guide is listed as an illustra-
tive example), the Treasury Department
and the IRS agree that additional detail
would be helpful, and the final regulations
include a parenthetical noting that both
indoor and outdoor locations are covered.
Another commenter requested that
banquet wait staff be added to the List
of Occupations that Receive Tips. The
proposed regulations included the “Wait
Staff” (TTOC 102) category. The Treasury
Department and the IRS agree that addi-
tional detail would be helpful to confirm
that banquet wait staff are covered by this
category. The final regulations add “ban-
quet staff” as an illustrative example, and
the description is amended to read, “Take
orders and serve food and beverages to
patrons in dining establishments or at
catered events” (newly added language
shown in italics).
One commenter asked whether people
who dress as Santa Claus for parties are in
an occupation that customarily and regu-
larly received tips on or before December
31, 2024. Individuals dressed up as Santa
Claus, as well as other characters or celeb-
rities, are covered by the “Entertainers and
Performers” (TTOC 208) category.
Another commenter asked that self-en-
richment and self-improvement instruc-
tors, such as intuition coaches, energy
practitioners (including Reiki and Energy
Psychology practitioners), and medita-
tion instructors be included on the List of
Occupations that Receive Tips. Although
these specific occupations were not iden-
tified in the proposed regulations, depend-
ing on the nature of the instruction pro-
vided and the facts and circumstances of
each particular situation, these instruc-
tors could be covered under “Self-En-
richment Teachers” (TTOC 702), if their
instruction is for the primary purpose of
self-enrichment, rather than for an occu-
pational objective, educational attain-
ment, competition; or fitness; “Sports and
Recreation Instructors” (TTOC 706), if
they are teaching or instructing individu-
als or groups for the primary purpose of
recreation, rather than for an occupational
objective, educational attainment, compe-
tition, or fitness; or “Exercise Trainers and
Group Fitness Instructors” (TTOC 608),
if they are instructing or coaching groups
or individuals in exercise activities for the
primary purpose of personal fitness.
One commenter requested that senior
living and resident care service providers
be included in the List of Occupations that
Receive Tips. The proposed regulations
would have included the category of “Per-
sonal Care and Service Workers” (TTOC
501). To clarify that resident care is also
included in this occupation category, the
description in the final regulations pro-
vides that “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, at a daytime nonresi-
dential facility or a residential facility”
(newly added language shown in italics).
Another commenter asked that the
illustrative examples name all beauty-sec-
tor occupations including estheticians and
apprentices and assistants. As discussed
previously, the illustrative examples are
a non-exhaustive list of occupations. In
addition, the final regulations clarify that
apprentices and assistants qualify under
the applicable TTOC occupation category
if they perform the same services as those
listed in the TTOC occupation description.
Finally, a commenter noted that the
proposed category of “Pet Caretaker”
(TTOC 506) would exclude individuals
who provide care to horses because horses
are considered livestock in certain legal
contexts. This commenter stated that cer-
tain tasks involved in the care of horses,
including grooming and exercising, are
similar to the tasks included in the descrip-
tion of pet caretakers. In response to this
comment, the final regulations include the
category of “Pet and Show Animal Care-
taker” (TTOC 506). In addition, “horse
groomer” has been added to the list of
illustrative examples for this occupation
category.
B. Comments suggesting new
occupations be added to the List of
Occupations that Receive Tips
In evaluating comments suggesting
new occupations for inclusion on the List
of Occupations that Receive Tips, the
Treasury Department and the IRS con-
sulted the same data sources as in prepar-
ing the proposed List of Occupations that
Receive Tips in the proposed regulations
(the 2023 income tax return data, the pre-
liminary data available for tax year 2024,
IRS voluntary tip reporting program data,
legislative history and survey data regard-
ing tipped occupations), as well as the
updated preliminary data available for
tax year 2024. The Treasury Department
and the IRS examined the data for the
suggested new occupations at the more
granular level of the occupations listed on
individual income tax returns, in addition
to looking at the SOC Codes of the sug-
gested new occupations. This examination
of the data is the basis for responding to
the following comments.
12

One commenter requested that “flo-
rists” be included on the List of Occu-
pations that Receive Tips. The proposed
regulations would have included event
12
Given the wide variation of terms used to characterize occupations on income tax returns, it was not feasible to examine every occupation in this way. For this reason, this examination was
conducted only for occupations that commenters suggested were missing from the list of tipped occupations in the proposed regulations.

Bulletin No. 2026–18 847 April 27, 2026
florist as an illustrative example of “Pri-
vate Event Planners” (TTOC 502), and the
SOC Code for Floral Designers, 27-1023,
would have been included as one of the
related SOC Code for TTOC 502. Simi-
larly, the proposed regulations would have
included floral delivery persons as an
illustrative example of “Goods Delivery
People” (TTOC 804). In response to this
comment, the Treasury Department and
the IRS reviewed the available data again,
this time examining the data for occu-
pations listed on individual income tax
returns that were related to florists, in addi-
tion to looking at data for florist-related
SOC Codes. The Treasury Department
and the IRS determined that the data for
florist-related occupations listed on indi-
vidual income tax returns supports add-
ing a new TTOC for “Floral Designers”
(TTOC 510), which encompasses a wider
variety of floral workers. “Event florist”
was removed as an illustrative example
from “Private Event Planners” and added
to the new “Floral Designers” category,
and the related SOC Code, 27-1023, was
also moved from “Private Event Planner”
to the new “Floral Designers” category.
Another commenter asked that artists
and artisans be added to the List of Occu-
pations that Receive Tips. The proposed
regulations did not separately identify
artists as an occupation that customarily
and regularly received tips on or before
December 31, 2024. However, individ-
uals who may be described as artists
appeared in multiple occupation classi-
fications, and the proposed regulations
would have included certain performing
artists on the List of Occupations that
Receive Tips. For example, both dancers
and musicians would have been included
(TTOC 205 and 206). In response to this
comment, the Treasury Department and
the IRS reviewed the same data sources
described in the proposed regulations,
examining the data for occupations listed
on individual income tax returns that were
related to artists, distinct from occupa-
tions such as dancers and musicians, in
addition to looking at data for artist-re-
lated SOC Codes. The Treasury Depart-
ment and the IRS determined that the
data for artist-related occupations listed
on individual income tax returns supports
the conclusion that a visual artist is also
an occupation that customarily and regu-
larly received tips on or before December
31, 2024. The final regulations include the
new category of “Visual Artists (TTOC
509)” This category includes individuals
who create original visual artwork using
any of a wide variety of media and tech-
niques. Examples of this category include
ice sculptor and caricature sketch artist.
Tip-related income tax return data for the
occupation “artisan” did not support add-
ing this occupation category as a separate
TTOC. However, the terms “artist” and
“artisan” are similar in meaning and it is
possible that many individuals who per-
form services as an artisan might also be
considered as performing services as an
artist, depending on the particular facts
and circumstances.
One commenter suggested that gas
station attendants who pump gas for cus-
tomers where they are required to do so by
State law should be included on the List of
Occupations that Receive Tips. The Trea-
sury Department and the IRS reviewed
tip-related income tax return data for gas
pump attendants located in New Jersey
and Oregon, the two States that currently
prohibit customers from pumping their
own gas.
13
This data showed that gas
pump attendants in States where full-ser-
vice gas pumping is mandated customar-
ily and regularly received tips on or before
December 31, 2024. Based on this data,
the final regulations include a new TTOC
for “Gas Pump Attendants,” which applies
to all individuals who pump gas for cus-
tomers at a gas station and may also clean
the windshield, check the oil level, or
check the tire pressure of the customer’s
car in conjunction with the car being refu-
eled.
Commenters suggested that chiroprac-
tors, accountants, tax preparers, clergy
members, concert merchandise sellers,
and “low bono” legal service providers
(legal professionals who provide legal
services to clients on a sliding scale based
on income) be added to the List of Occu-
pations that Receive Tips. In response to
these comments, the Treasury Depart-
ment and the IRS reviewed the same data
sources described in the proposed regula-
tions (as well as the updated preliminary
2024 tax data), examining the data for
occupations listed on individual income
tax returns that were related to chiroprac-
tors, accountants, tax preparers, clergy
members, concert merchandise sellers,
and “low bono” legal service providers,
in addition to looking at the data for the
SOC Codes related to these occupations.
Except for clergy members acting in cer-
tain roles, the Treasury Department and
the IRS determined that the data does not
support that these occupations were cus-
tomarily and regularly tipped on or before
December 31, 2024. For that reason, these
occupations are not included in the List of
Occupations that Receive Tips in the final
regulations. Concerning clergy, while the
data does not support listing clergy mem-
bers as a separate occupation that custom-
arily and regularly received tips, it does
reflect that clergy may receive tips in an
event setting such as a wedding or funeral.
For this reason, they are included as an
illustrative example under “Event offici-
ants” with a TTOC of 505.
Some commenters asked that retail
cashiers be included on the List of Occu-
pations that Receive Tips. The Treasury
Department and the IRS reviewed the
same data sources described in the pro-
posed regulations (as well as the updated
preliminary 2024 tax data), examining
the data for occupations listed on individ-
ual income tax returns that were related
to retail cashiers, in addition to looking
at the data for the SOC Codes related to
this occupation. While tip-related income
tax return data does show that some indi-
viduals who self-identified as “cashiers”
received tips, the data also shows that
these cashiers receiving tips mostly
worked in an industry that would clas-
sify them as an occupation separate from
“retail cashier.” Specifically, many such
cashiers worked in the Hotel and Food
Services sectors so that these cashiers
would likely be categorized as Fast Food
and Counter Workers (TTOC 107) (for
those in food establishments) or Hotel,
Motel, and Resort Desk Clerks (TTOC
303) (for those in hotel establishments).
Thus, the data does not support adding a
13
Under 2023 Oregon House Bill No. 2426, signed into law on August 4, 2023, the state of Oregon now allows self-service in certain situations, but certain gas stations in the State are still
required to provide full service for at least half of the gas pumps at the station. 2023 Oregon House Bill No. 2426, Oregon Eighty-Second Legislative Assembly.

April 27, 2026 848 Bulletin No. 2026–18
more generalized “cashier” category, and
this occupation category is not included in
the List of Occupations that Receive Tips
in the final regulations.
Another commenter requested that the
full range of positions in the gaming indus-
try be included in the List of Occupations
that Receive Tips, including poker asso-
ciates who change out chips in casinos,
and online dealers (sometimes known as
game presenters) and other workers in the
online gaming industry. There is no statu-
tory authority in section 224 for including
an occupation based solely on the fact that
it is practiced in a certain industry. Only
occupations that customarily and regu-
larly received tips on or before December
31, 2024, are included in the List of Occu-
pations that Receive Tips. Occupations in
the gaming industry that meet this crite-
rion are included in the list. This includes
many of the occupations identified by the
commenters, such as poker associates
who change out chips in casinos (included
in “Gambling Change Persons and Booth
Cashiers” (TTOC 202)). For these rea-
sons, no additional occupational catego-
ries were added to the List of Occupations
that Receive Tips in response to this com-
ment.
One commenter asked that the reg-
ulations clarify the tax consequences
when managerial staff or owners par-
ticipate in tip pools. The rules under the
FLSA prohibit managers and supervi-
sors from receiving tips from a tip pool.
See 29 U.S.C. 203(m)(2)(b) and 29 CFR
531.54(c)(3) and (d). Given this prohibi-
tion under the FLSA, the final regulations
provide that amounts received by a man-
ager or supervisor through a voluntary or
mandatory tip-sharing arrangement such
as a tip pool are not qualified tips. How-
ever, the final regulations also clarify that
amounts received directly by a supervisor
or manager for services they provided
in the course of duties performed in an
occupation that customarily and regularly
received tips on or before December 31,
2024, are qualified tips if all other require-
ments for qualified tips are met. Two
examples that demonstrate this provision
concerning managers are included in the
final regulations.
Finally, several commenters suggested
that there should be a safe harbor for
all participants in a GITCA or Tip Rate
Determination Agreement (TRDA) pro-
viding that they are automatically consid-
ered in a qualifying occupation. One com-
menter suggested that GITCA participants
should not be eligible for the deduction.
Another commenter asked that GITCA
participants be able to claim the deduction
based on their designated tip rates. Sec-
tion 224 provides no basis for automati-
cally considering participants in GITCA
and TRDA as working in occupations on
the List of Occupations that Receive Tips.
An occupation that did not customarily
and regularly receive tips on or before
December 31, 2024, is not eligible for the
section 224 deduction, even if workers in
a similar occupation may have customar-
ily and regularly received tips in certain
specific contexts (such as in a casino). For
these reasons, no safe harbor for GITCA
and TRDA participants was added to the
final regulations. There also is no basis for
excluding an otherwise eligible individual
from the section 224 deduction merely
because the individual is a participant in
GITCA, and no such rule is included in
the final regulations. In addition, the pro-
posed regulations would have provided
that GITCA participants could claim the
deduction based on their designated tip
rates, and this provision is included in the
final regulations.
Other nonsubstantive edits were made
to the chart to correct SOC Code number-
ing errors. No occupations included on the
proposed List of Occupations that Receive
Tips in the proposed regulations were
removed from the List of Occupations that
Receive Tips in the final regulations.
3. Comments on the Requirement that
Qualified Tips must be Voluntary
Section 224(d)(2)(A) expressly
requires that qualified tips are paid “vol-
untarily without any consequence in the
event of nonpayment” and not “the sub-
ject of negotiation.” The proposed regu-
lations would have provided that amounts
are qualified tips only if they are paid
voluntarily and without any consequence
in the event of nonpayment, are not the
subject of negotiation, and are determined
by the payor. Concerning automatic gra-
tuities, the proposed regulations would
have provided that qualified tips must be
paid without compulsion and therefore
service charges, automatic gratuities and
any other mandatory amounts automat-
ically added to a customer’s bill by the
vendor or establishment are not qualified
tips, even if the amounts are subsequently
distributed to employees. However, if a
customer is expressly provided an option
to disregard or modify amounts added to
a bill, such amounts are not mandatory
amounts.
Several commenters supported the
exclusion of automatic gratuities from the
definition of qualified tips in the proposed
regulations. These commenters agreed that
an automatic gratuity is not voluntary as
required by section 224. Other comment-
ers argued that automatic gratuities and
service charges serve the same purpose as
other tips and should be considered qual-
ified tips. These commenters contended
that many employers already treat these
amounts as tips and that automatic gra-
tuities are an important source of income
for certain employees, such as cooks and
dishwashers, who do not typically receive
tips through tip-sharing arrangements due
to FLSA tipping rules.
14
Several of these
commenters maintained that automatic
gratuities are an important source of tips
in large group and banquet situations.
Several commenters requested a transition
rule, allowing individuals to treat service
charges as tips for 2025. Some comment-
ers argued that an automatic gratuity is
voluntary in the sense that the customer
takes the automatic gratuity into account
when deciding whether to patronize an
establishment.
Automatic gratuities added to a bill
with no explicit option for the customer
to decline or adjust the gratuity are man-
datory because the customer must pay the
gratuity to receive the service. The cus-
tomer’s “option” to reject the automatic
gratuity by opting not to patronize the
business is not an option to pay or not pay
a gratuity (which is a choice a customer
ordinarily makes based on the customer’s
14
The FLSA 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, and the employer cannot
require the employee to pool tips except with other “employees who customarily and regularly receive tips.” 29 U.S.C. 203(m)(2)(A).

Bulletin No. 2026–18 849 April 27, 2026
opinion of the service after the service
is provided), but is instead the option to
patronize or not patronize the business
(which is a choice the customer makes
based on, among other things, the cost of
the service, including the automatic gra-
tuity, and the type and quality of services
offered by the business, before the cus-
tomer receives any service). In addition,
the business determines the tip percentage
of an automatic gratuity, not the customer
(i.e., the payor). For these reasons, auto-
matic gratuities do not comply with the
requirements for qualified tips provided
by section 224(d)(2)(A). To the extent that
the customer freely decides to provide an
additional gratuity, this additional amount
constitutes a qualified tip if all factors are
met with respect to that portion.
In addition, the IRS has long maintained
that service charges do not qualify as tips.
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 indicates 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) gen-
erally, the customer has the right to deter-
mine 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.
Because the proposed regulations are
consistent with section 224 and the IRS’s
longstanding position that service charges
are not tips, the final regulations maintain
the position in the proposed regulations
that automatic gratuities, such as service
charges, are not qualified tips for purposes
of the deduction. In addition, because the
statute is clear on this point and the IRS’s
position that automatic gratuities are not
tips has been publicly available since at
least 2012, a transition rule for 2025 con-
cerning automatic gratuities is not war-
ranted.
One commenter noted that while Rev-
enue Ruling 2012-18 used similar rules
to section 224(d)(2)(A) to distinguish
between tips and service charges for FICA
and income tax withholding purposes, the
revenue ruling, unlike the proposed reg-
ulations, did not include examples with
respect to “suggested gratuities”. The
commenter suggested that the revenue
ruling be updated to include examples of
“suggested gratuities” that mirror those in
the proposed regulations to provide fur-
ther clarification of the revenue ruling’s
application in these situations. The Trea-
sury Department and the IRS agree that
the revenue ruling contains rules for dis-
tinguishing tips from service charges that
are similar to the rule provided in section
224(d)(2)(A) and that “suggested gratu-
ities,” as described in the proposed regu-
lations, comply with these rules such that
they would be considered tips under the
revenue ruling. Updates to Revenue Rul-
ing 2012-18 are outside the scope of these
final regulations, but the Treasury Depart-
ment and the IRS will consider updating
Revenue Ruling 2012-18 or providing
additional guidance containing examples
involving suggested gratuities and the
employment tax consequences of those
payments.
The proposed regulations would have
provided several examples demonstrat-
ing voluntary tipping practices involv-
ing Point-of-Sale (POS) system. Some
commenters requested that the final reg-
ulations clarify that other POS systems
are considered voluntary as long as they
provide the customer with the option of
selecting a zero value. Specifically, sev-
eral commenters mentioned “tip sliders”
that allow the customer to designate a tip
using a sliding bar on a POS screen, which
the customer “slides” to the desired tip
amount. Other commenters asked about
POS systems that only allow the customer
to either choose a percentage or choose
“other” and input zero manually.
The proposed regulations would have
provided that if a customer is expressly
provided an option to disregard or mod-
ify amounts added to a bill, such amounts
are not mandatory amounts. The language
in the final regulations has been modified
slightly to make clear that the customer
must have the option to reduce the tip
amount to zero. Under this provision, tip
selection methods such as POS systems
with a tip slider that goes to zero or an
option for the customer to select “other”
and input zero are voluntary. The exam-
ples in the final regulations have been
modified to clarify that these methods are
considered voluntary tipping practices.
A few commenters asked if contrac-
tual arrangements that include suggested
tips for services before they are provided
are voluntary tips. One commenter asked
for clarification as to what “without con-
sequence” means. In § 1.224-1(c)(3)
(Example 8) of the proposed regulations
described a contract with varying prices
depending on whether a tip was included.
The failure to agree to a specific tip
amount resulted in a higher price for the
service. Accordingly, nonpayment of the
tip was not “without consequence” in this
situation (because nonpayment resulted
in a higher price). If the contract terms
merely added the discretionary tip as a
“convenience” for the customer, subject
to the customer’s agreement, the tip would
be voluntary. The Treasury Department
and the IRS agree that additional guidance
would be helpful on this issue. Although
whether the failure to pay a tip is made
“without consequence” will depend on
the facts and circumstances of a particu-
lar situation, the final regulations clarify
that situations where nonpayment of a tip
is without consequence include situations
where nonpayment of the tip does not
have any impact on the scope or cost of
the service. The final regulations also con-
tain a new example where the tip is part of
the contract that is entered into before the
services are provided. The example con-
cludes that the tip is a qualified tip because
it is paid without consequence. If the cus-
tomer had chosen to not pay the tip then
the scope or cost of the service would not
have been affected.
Several commenters requested clar-
ification regarding the voluntary nature
of payments to digital content creators.
One commenter noted that creators often
perform multiple activities in a single ses-
sion, and payments could be intended for
different activities. The commenters asked
for guidance on when payments are tips
versus compensation for performance or
content. One commenter asked that the
final regulations clarify that audience
engagement mechanisms such as “super
chats,” and “super stickers,” which pro-
vide superficial digital rewards to con-

April 27, 2026 850 Bulletin No. 2026–18
sumers of digital content, are qualified
tips. Other commenters asked that the
final regulations address situations where
the platform hosting a digital content cre-
ator’s content receives a portion of the tip
amount.
In response to the comments regard-
ing the activities of digital content cre-
ators, the final regulations include two
new examples to help clarify when pay-
ments to digital content creators are tips
and when they are compensation. One
example involves customer payments to a
digital content creator that enable custom-
ers to gain access to the creator’s content.
These payments are not tips, but rather
compensation to the creator for services
provided (i.e., the content). The other
example involves voluntary customer
payments to a digital content creator after
the customer has already gained access to
the creator’s content, which is a tip to the
content provider because the payment was
not required to access content and was
voluntary and determined by the customer.
The final regulations also clarify that
tipping digital content creators through
audience engagement mechanisms that
result in superficial digital rewards, such
as highlighted messages or other digital
tokens of appreciation from the tip recip-
ient that are negligible in value, do not
disqualify an otherwise qualified tip. The
final regulations also provide an exam-
ple involving digital content creators and
audience engagement mechanisms.
Concerning platforms that retain a por-
tion of amounts provided as tips to con-
tent creators, platform hosting is not the
equivalent of content creation and is not
on the List of Occupations that Receive
Tips. Section 224(d)(1) provides that
the term “qualified tips” means cash tips
received by an individual. For purposes
of the statute, the term “individual” refers
to the person performing the services and
receiving tips in connection with those
services and does not include an entity that
facilitates payment or transmits amounts
between customers and service providers.
In the context of digital content creation,
amounts provided by users as tips are
received only to the extent such amounts
are paid to the content creator. Any portion
of a user’s payment that is retained by a
host platform, which is not an occupation
on the List of Occupations that Receive
Tips, is not received by the individual con-
tent creator and is not a qualified tip for
purposes of the section 224 deduction. No
changes were made to the final regulations
in response to this comment.
4. Other Comments Regarding the
Definition of “Qualified Tips”
Several commenters asked that the
final regulations clarify whether tips that
are not reported on an information return
because, for instance, the tip is provided
in cash to an independent contractor or
is below the required reporting threshold
for certain information returns, are quali-
fied tips. Other commenters asked that the
IRS provide a mechanism similar to Form
4137 for independent contractors to report
tips that are not included on an informa-
tion return.
The text of section 224(a) allows a
deduction only for amounts of qualified
tips that are “included on statements fur-
nished to the individual pursuant to sec-
tion 6041(d)(3), section 6041A(e)(3), sec-
tion 6050W(f)(2), or section 6051(a)(18),
or reported by the taxpayer on Form 4137
(or successor).” The proposed regulations
would have included similar language in
§ 1.224-1(a). In response to these com-
ments, the final regulations further clarify
that amounts received as a tip that are not
separately reported to an individual on
a statement furnished to the individual
pursuant to section 6041(d)(3), section
6041A(e)(3), section 6050W(f)(2), or sec-
tion 6051(a)(18), or reported by the tax-
payer on Form 4137 (or successor) are not
eligible for the deduction under section
224. But see Notice 2025-69 for transi-
tion rules related to 2025. Issues related to
reporting requirements, such as providing
a means by which independent contractors
can report tips that are not included on an
information return, are beyond the scope
of these regulations. The requirement that
tip amounts be reported to independent
contractors on an information return is
statutory and serves as an anti-abuse mea-
sure to prevent independent contractors
from recharacterizing income as tips.
Another commenter asked that the final
regulations provide a mechanism for part-
ners to claim the deduction. The amount
of a tip received by a partner in a partner-
ship in the individual’s capacity as a part-
ner would be reported on an information
return provided to the partnership, not to
the individual partner, even if the indi-
vidual partner ultimately receives the tip.
Section 224(a) is clear that only qualified
tips included in a statement furnished to
an “individual” can be allowed as a deduc-
tion under section 224. Because the state-
ment reporting the tip is provided to the
partnership, not the individual, the partner
cannot claim this amount as a deduction
under section 224.
Finally, one commenter requested that
the final regulations clarify eligibility for
the deduction for an employee who works
in two different occupations for the same
employer, one occupation that is on the
List of Occupations that Receive Tips and
one that is not. If all other section 224
statutory and regulatory requirements are
met, any tip amount received in an occu-
pation that is on the List of Occupations
that Receive Tips in § 1.224-1(i) may
be claimed as a deduction under section
224. Tip amounts received in an occupa-
tion that is not on the List of Occupations
that Receive Tips are not eligible for the
deduction. If an individual works in two
occupations, one that is on the List of
Occupations that Receive Tips and one
that is not, the individual may claim the
qualified tip amounts received in the occu-
pation that is on the List of Occupations
that Receive Tips as a deduction under
section 224 (assuming all other statutory
and regulatory requirements are met), but
may not claim as a section 224 deduction
any tip amounts received in the occupa-
tion that is not on this list. If an employee
works in two occupations that are both
on the List of Occupations that Receive
Tips, the individual may claim the quali-
fied tip deduction with respect to amounts
received in both occupations under sec-
tion 224. Since this result is a function of
existing rules in the proposed regulations,
no change was made in the final regula-
tions to address this question.
5. Cash Tips Definition
The proposed regulations would have
defined cash tips as tips received from
customers or, in the case of an employee,
through a mandatory or voluntary tip-shar-
ing arrangement, such as a tip pool, that
are paid in a cash medium of exchange,

Bulletin No. 2026–18 851 April 27, 2026
including by cash, check, credit card,
debit card, gift card, tangible or intangi-
ble 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. The proposed
regulations would have excluded from
this definition 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 digital assets). The
proposed regulations would have defined
“tips” as “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 transaction.
Several commenters asked for more
clarification on the definition of cash tips.
One commenter suggested that “cash tips”
be defined as any medium denominated in
U.S. cash, so as not to imply a preference
for physical currency. Some commenters
asked that the final regulations affirm that
the use of certain specific methods of pay-
ment, including digital tipping systems
(such as mobile apps), ticket-out/tick-
et-in systems (used in casinos), and digi-
tal assets such as stablecoins, bitcoin and
ether (referred to as Ethereum in the com-
ment), qualify as cash tips for purposes of
the deduction. One commenter asked that
the final regulations allow for future guid-
ance to define cash tips in the event other
dollar-pegged methods become avail-
able. A few commenters requested the
final regulations address foreign-sourced
tip amounts and domestic-sourced tip
amounts that are paid in foreign currency,
specifically, whether these amounts qual-
ify for the deduction and the reporting
obligations for foreign-sourced income.
Commenters also asked whether vol-
untary amounts that are added to e-com-
merce purchases and donations made to
community websites are qualified tips.
The Treasury Department and the IRS
have determined that the cash tips defini-
tion in the proposed regulations generally
provides a comprehensive definition that
already addresses the various methods
of payment about which commenters
inquired. For this reason, the definition of
cash tips in the final regulations remains
largely unchanged from the proposed
regulations with the exception that the
final regulations clarify that for purposes
of section 224, cash tips also include
amounts paid in foreign currency. Con-
cerning digital tipping systems, if the tips
provided through the system are denomi-
nated in cash (i.e., paid as a fixed amount
of currency); are in excess of the amount
agreed to, required, charged, or otherwise
reasonably expected to have to be paid for
the services; and are provided to an inde-
pendent contractor or, if provided to an
employee, are provided to the employee
directly or through a tip-sharing arrange-
ment, then the tips are considered cash tips
for purposes of the deduction. In order for
the amount to be eligible for the section
224 deduction in the case of an employee,
the amount must also be reported to the
employer as required by section 6053(a)
15

or reported by the employee on Form
4137. Similarly, if tips provided using a
casino ticket-out, ticket-in system comply
with the requirements for cash tips pro-
vided in these final regulations, then the
tips are cash tips.
The proposed regulations did not
directly address the treatment of stable-
coins pegged to the value of the U.S.
dollar. Some commenters noted that the
intended treatment of stablecoins under
the proposed regulations was unclear and
requested clarification. These requests,
and other developments, have led the
Treasury Department and the IRS to
reconsider whether any digital assets,
including stablecoins, should be consid-
ered cash tips for purposes of section
224. Most notably, in July 18, 2025,
Congress enacted the Guiding and Estab-
lishing National Innovation for U.S.
Stablecoins (GENIUS) Act (Public Law
119-27), which provides a framework for
regulating certain stablecoins, referred to
as “payment stablecoins.”
16
The GENIUS
Act makes clear that payment stablecoins
are distinct from national currencies and
provides that payment stablecoins may
not be marketed as legal tender or as
issued by the United States. On Septem-
ber 19, 2025, the Treasury Department
published an Advance Notice of Pro-
posed Rulemaking (ANPRM) soliciting
public comments on questions relating
to the implementation of the GENIUS
Act (90 FR 45159). Though the GENIUS
Act does not address the Federal income
tax treatment of payment stablecoins,
the ANPRM solicited comments on the
extent to which guidance on their tax
treatment would be necessary or helpful
to taxpayers. The Treasury Department
is reviewing the comments it received
on the ANPRM and considering poten-
tial guidance on these topics, including
whether payment stablecoins should be
treated as cash or cash equivalents for cer-
tain U.S. Federal income tax purposes. In
addition, legislative proposals have been
advanced that would address various tax
issues relating to digital assets, including
the treatment of stablecoins.
In light of the foregoing, the final reg-
ulations provide that all digital assets (as
that term is defined in section 6045(g)(3)
(D) of the Code and § 1.6045-1(a)(19)) are
excluded from the definition of cash tips.
The Treasury Department and the IRS
will consider the tax treatment of payment
stablecoins in connection with implemen-
tation of the GENIUS ACT, including
whether these final regulations should be
revised if payment stablecoins are treated
as cash or cash equivalents for other U.S.
Federal income tax purposes. Addition-
ally, if legislation is enacted that modifies
the characterization of digital assets or of
particular digital assets such as payment
stablecoins such that they may be more
appropriately characterized as “cash tips,”
the Treasury Department and the IRS will
take that legislation into account in con-
sidering whether to revise the rules gov-
erning the treatment of digital assets pro-
vided in these final regulations.
Concerning future guidance for other
methods of payment, if the need arises to
address other methods of payments, the
Treasury Department and the IRS will
15
With respect to employees, the existing rules under section 6053(a) require employees to report tips received in the course of their employment to their employers, and employers to take
those reported amounts into account for wage reporting purposes. This reporting requirement does not apply to independent contractors.
16
The GENIUS Act becomes effective on the earlier of January 18, 2027, or 120 days after final implementing regulations are issued. The term “payment stablecoin” is defined in section
2(22) of the GENIUS Act.

April 27, 2026 852 Bulletin No. 2026–18
consider issuing additional guidance at
that time.
Regarding comments on e-commerce
voluntary surcharges, whether or not a
voluntary surcharge added to an e-com-
merce purchase is a qualified tip depends
on the occupation of the tip recipient. If
the service provided through the e-com-
merce transaction is from a person provid-
ing that service in an occupation that is on
the List of Occupations that Receive Tips,
and all other requirements for qualified
tips are met, then the tip is a qualified tip.
For example, if a customer commissions
an artist on an e-commerce site to create
a piece of art, and the customer includes a
cash tip when providing payment, the cash
tip is a qualified tip if all other require-
ments for qualified tips are met because
“artist” is an occupation included in the
List of Occupations that Receive Tips.
Finally, concerning voluntary chari-
table donations, including donations to
community websites for the benefit of an
individual or group of individuals, such
amounts are not qualified tips because
they are not amounts paid to an individual
in excess of an expected or agreed-upon
amount for a service provided in an arm’s
length transaction.
6. Specified Service Trade or Business
Exclusion
The proposed regulations would have
provided that an amount received by an
individual in the course of a specified
service trade or business (as defined in
section 199A(d)(2) and § 1.199A-5(b))
is not a qualified tip. Tips received by
an employee performing services for the
employee’s employer in the course of a
specified service trade or business oper-
ated by the employer are not qualified tips,
and the proposed regulations would have
clarified that this rule would have applied
without regard to whether an owner of the
trade or business is able to claim a section
199A deduction. The proposed regulations
would have also clarified that this rule
applies even if the employee receiving
tips in the course of working for a speci-
fied service trade or business employer is
working in an occupation that customarily
and regularly received tips on or before
December 31, 2024, and is listed on the
proposed List of Occupations that Receive
Tips. The Treasury Department and IRS
requested comments on the application
of the existing rules under § 1.199A-5(b)
to the specified service trade or business
definition in section 224.
One commenter expressed concern that
using the definition of a specified service
trade or business from section 199A(d)(2)
may exclude occupations that have histor-
ically received tips. Another commenter
noted that Treasury and IRS lack the
authority to expand the tips deduction by
deviating from section 199A(d)(2)’s defi-
nition of a specified service trade or busi-
ness. Several commenters suggested that
additional guidance be issued to explain
how the specified service trade or business
rules apply in determining the qualified
tips deduction, including adding examples
of how the specified service trade or busi-
ness rules apply in different employment
and self-employment scenarios and the
recordkeeping requirements that must be
met. One commenter requested specific
guidance regarding the interplay of the
hotel and lodging industry and qualified
tips for those engaged in a specified ser-
vice trade or business. Another requested
that the act of providing personal appear-
ance services, such as barbering, not be
considered a specified service trade or
business for purposes of the deduction.
Another commenter noted that the exclu-
sion for tips received in a specified service
trade or business creates uncertainties and
administrative complexities for employ-
ers and tipped workers, and that certain
employers that did not previously have
to determine whether they were speci-
fied service trade or businesses will now
have to make such determinations. One
commenter supported a clarification in
the final regulations that roles that do not
pertain to the principal trade or business
at an establishment may still receive the
deduction from tips paid in the course of
employment at a specified service trade or
business.
One commenter suggested that the
specified service trade or business exclu-
sion be applied when taxpayers file their
personal income tax returns, rather than by
requiring Form W-2 and Form 1099-series
reporting. Another commenter requested
that the final regulations refine the defini-
tion of specified service trade or business
in § 1.199A-5 for section 224 purposes
by providing objective criteria for the
term, “reputation or skill,” defining the
terms “appearance at an event” and “well
known,” and adopting a de minimis safe
harbor so that occasional demonstrations
or media moments while working for a
non-specified service trade or business
employer do not trigger specified service
trade or business classification. The com-
menter also recommended that the final
regulations clarify whether a person who
is not “well-known” and working for a
non-specified service trade or business
employer at an event may nevertheless
trigger tip disqualification if they make an
incidental specified service trade or busi-
ness “appearance.”
The deduction for qualified tips is a
newly enacted provision and taxpayers
receiving tips in 2025 are determining
their eligibility for the deduction for the
first time. As stated in Notice 2025-69,
the Treasury Department and the IRS
understand that it may be difficult for
taxpayers to determine whether their tips
were received in the course of a speci-
fied service trade or business. This may
be particularly difficult for employees,
since section 224(d)(2) provides that this
determination turns on whether the trade
or business of their employer in the course
of which they receive tips is a specified
service trade or business. In light of these
considerations, Notice 2025-69 provided
transition relief for taxpayers regarding
the requirement that qualified tips must
not be received in the course of a specified
service trade or business. In the interest of
sound tax administration, Notice 2025-69
provided a transition period for purposes
of IRS enforcement and administration
with regard to the specified service trade
or business requirement. Specifically, the
Notice stated that, until January 1 of the
first calendar year following the issuance
of final regulations regarding the deter-
mination of whether a trade or business
is a specified service trade or business
for purposes of section 224 and associ-
ated employer information reporting, the
IRS will treat taxpayers (both employees
and self-employed individuals) as hav-
ing received tips in the course of a trade
or business that is not a specified service
trade or business if the taxpayer is in an
occupation that customarily and regularly
received tips on or before December 31,

Bulletin No. 2026–18 853 April 27, 2026
2024, as provided by the Secretary. The
Notice further provided that the Treasury
Department and the IRS intend to issue
proposed regulations and solicit public
comment on these issues before publish-
ing final regulations. The final regulations
do not address the specified service trade
or business exclusion under section 224,
but subsection (g) of § 1.224-1 is reserved
for guidance on this exclusion.
7. Comments Concerning Amounts
Received for Illegal Activities,
Pornography, and Prostitution
The proposed regulations would have
provided that any amount received for
a service the performance of which is a
felony or misdemeanor under applicable
law is not a qualified tip. The proposed
regulations would have further excluded
from the definition of qualified tips, any
amount received for prostitution services
and any amount received for pornographic
activity.
Some commenters supported these
exclusions, and one commenter requested
that this exclusion be expanded to include
amounts paid to strippers, exotic dancers,
or other sexually suggestive perform-
ers who dance solely for the purposes of
provocation. Several other commenters
objected to the exclusions, arguing that
the Treasury Department and the IRS lack
authority to impose these restrictions. In
addition to noting that certain pornogra-
phy is legal, some commenters stated that
pornography is protected First Amend-
ment speech, that these businesses pay
taxes, and that in fairness these businesses
and their employees should have access
to the deduction for qualified tips. One
commenter suggested the prohibition be
limited to activity that is unlawful under
State or Federal law. Several commenters
requested that the regulations define por-
nographic activity.
Section 224(d)(2)(C) provides an
amount received by an individual is not
a qualified tip unless “such other require-
ments as may be established by the Secre-
tary in regulations or other guidance are
satisfied.” The exclusion from qualified
tips for illegal activities, prostitution ser-
vices, and pornographic activities falls
under the authority granted to the Trea-
sury Department and the IRS in section
224(d)(2)(C) and (g), and these provisions
remain unchanged in the final regulations.
This exclusion is intended to address the
potential for greater noncompliance and
abuse with respect to these activities and
services. The Treasury Department and
the IRS will consider whether to provide
additional guidance regarding these exclu-
sions.
One commenter noted that State-le-
gal cannabis industry workers operate in
regulated, State-compliant industries and
should not be excluded merely because
their employers engage in commerce that
involves a federally classified controlled
substance. Workers in the cannabis indus-
try must meet statutory and regulatory
requirements like any other employee to
be eligible for the deduction for quali-
fied tips. Tips received by these workers
must be received in an occupation that is
included on the List of Occupations that
Receive Tips and must not be received for
a service the performance of which is a fel-
ony or misdemeanor under applicable law,
including under Federal law, to be quali-
fied tips eligible for the deduction under
section 224. Currently, Federal law and
many State laws generally make it unlaw-
ful to manufacture, distribute, dispense, or
possess marijuana. If Federal law changes,
making certain marijuana-related transac-
tions legal, and those same transactions
are legal under State law, then tip amounts
received in such transactions may be qual-
ified tips if all other requirements for qual-
ified tips are met. No change was made in
the final regulations in response to this
comment.
8. Anti-Abuse Rules
Section 224(g) provides that, “[t]he
Secretary shall prescribe such regulations
or other guidance as may be necessary to
prevent reclassification of income as qual-
ified tips, including regulations or other
guidance to prevent abuse of the deduc-
tion allowed by this section.” Under this
authority and to prevent reclassification of
income as qualified tips and other abuses,
the proposed regulations would have pro-
vided that a payment is not a qualified tip
if the tip recipient has an ownership inter-
est in or is employed by the payor of the
tip. Further, section 224(d)(2)(A) defines
“qualified tips” as amounts that are, among
other things, “determined by the payor.”
The proposed regulations would have reit-
erated this rule as part of the requirement
that qualified tips be voluntary.
Several commenters suggested provid-
ing additional rules to prevent recharacter-
ization of non-tip income to tip income.
One commenter noted that the regula-
tions contain no bright-line anti-abuse
tests, specific prohibitions, or illustrative
examples that delineate permissible ver-
sus impermissible practices and suggested
there should be a bright line test that trig-
gers disallowance. Another commenter
suggested broadening the definition of
qualified tips under the proposed regu-
lations to include an anti-recharacteriza-
tion provision that states that an amount
is not a “qualified tip” if, based on all the
facts and circumstances, it represents an
arrangement to replace or suppress wages,
or attempts to reclassify service charges
or wages as tips for the purpose of obtain-
ing the deduction. Another commenter
asked that “tips” or gratuities be very
specifically defined so that performance
bonuses for professional services are not
included. One commenter recommended
concrete standards, evidentiary bench-
marks, or examples that would deter arti-
ficial recharacterization, guide audit selec-
tion procedures, and state what indicators
auditors would look for and what type of
documentation would be required.
Other commenters suggested modi-
fications to the rule prohibiting qualified
tips from being paid to individuals with
an ownership interest in the payor and to
employees of the payor. One commenter
suggested that an example of a non-abu-
sive situation in which an employee’s
employer is the payor of a tip would be
when an employee is employed by two
unrelated employers, one for a tipped
occupation and one for a non-tipped
occupation, and the employer for the
non-tipped occupation tips the employee
for services provided by the employee in
the tipped occupation. The commenter
suggested that the final regulations limit
the rule by providing a narrow definition
of “ownership interest” that excludes de
minimis or incidental holdings, and by
limiting the application of the rule to situ-
ations where the tipped worker knows, or
reasonably should know, that the ultimate
source of funds is their employer.

April 27, 2026 854 Bulletin No. 2026–18
The Treasury Department and the IRS
agree that additional clarity on the prohi-
bition against reclassification of income as
qualified tips would be helpful. To that end,
the final regulations replace the provision
prohibiting ownership in or employment
by a payor with a provision stating that
an amount is not a qualified tip, and thus
not eligible for the deduction if, based on
all relevant facts and circumstances, the
amount represents a recharacterization of
wages or payments for goods or services
for purposes of claiming the deduction.
The final regulations further provide that
facts and circumstances that may indicate
a recharacterization of wages, payment for
services, or other income as tips include:
• A charge for services provided in an
invoice is less than the payment from
the payor shown on a related receipt
or information return, and the cash
tip reported on the receipt or infor-
mation return is in an amount that
approximates the difference between
the charge amount on the invoice and
payment amount on the receipt or
information return; and
• A significant shift in historical tipping
or payment practices between the
payor and the tip recipient.
In addition, the final regulations pro-
vide that if the following facts and circum-
stances are present, there is an irrebuttable
presumption that the amount paid reflects
a recharacterization of wages, payment
for services, or other income as tips, and
therefore cannot be a qualified tip:
• The employer of an employee is the
payor, as defined in § 1.224-1(c)(5)
of the final regulations, of a cash tip
received by the employee.
• The tip recipient has a direct owner-
ship interest in the payor, as defined
in § 1.224-1(c)(5) of the regulations,
of a cash tip.
The final regulations define ownership
interest to mean, in the case of a corpo-
ration, ownership (by vote or value) of
five percent or more of the stock in such
corporation; in the case of a partnership,
ownership of five percent of the profits
interest or capital interest in such part-
nership, or in any other case, ownership
of more than five percent of the benefi-
cial interests in the entity. An ownership
interest is tested as of the date the tip is
received. The final regulations also pro-
vide that an ownership interest is a direct
ownership interest if it is an ownership
interest held directly by the tip recipi-
ent or if it is an ownership interest held
through an entity disregarded as sepa-
rate from its owner for Federal income
tax purposes; an ownership interest held
through a qualified subchapter S sub-
sidiary as defined in section 1361(b)(3)
of the Code; an ownership interest held
through a grantor trust (under subpart E
of part 1 of subchapter J of charter 1 of
the Code); or an ownership interest held
through a custodian, broker, nominee,
agent, or other similar intermediary.
Because of its potential for abuse,
the final regulations provide no specific
exceptions for the situation in which an
employee has more than one employer,
and the employer unrelated to the tipped
occupation provides a tip to the employee.
Per the suggestion that “tips” be very
specifically defined, the final regulations
adopt the definition of tips from the pro-
posed regulations. Under this definition,
tips are 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. An amount that meets this definition
(whether labeled as a performance bonus
for services or otherwise) is a tip for pur-
poses of the deduction under section 224.
Whether the tip is a qualified tip depends
on whether the other requirements under
section 224 and these final regulations are
satisfied. Concerning the audit selection
procedure suggestions, as noted earlier,
audit selection and other IRS enforcement
procedures are beyond the scope of these
regulations.
One commenter requested confirma-
tion that a tip received directly from a
customer by a single-member limited lia-
bility company (LLC) or sole proprietor
will not be disallowed merely because
the entity could be viewed as making
the payment to the individual owner. In
response to this comment, and to provide
clarity concerning who is considered the
payor of a tip, the final regulations define
the term “payor” as the ultimate recipi-
ent of the services which, in most cases,
is the customer, client, or other service
recipient. The final regulations further
clarify that an entity, such as an employer,
a third party settlement organization, or
a sole proprietorship or single-member
LLC through which a tip recipient is
doing business, that acts merely as con-
duit to remit a tip initially paid by a cus-
tomer, client, or service recipient to the
tip recipient, is not a payor of the tip for
purposes of these regulations. Finally, the
final regulations clarify that statements
furnished to a sole proprietorship or a
single-member LLC that does not elect
to be treated as a corporation for income
tax purposes owned by a tip recipient
are considered to be furnished to the tip
recipient owner of the sole proprietor-
ship or single-member LLC to which
the statement was issued, regardless of
whether the name of the sole proprietor-
ship or single-member LLC appears as
the recipient on the statement.
17
9. Tip-Sharing Arrangements
Section 224(d)(3) defines cash tips to
include “tips received under any tip-shar-
ing arrangement.” Consistent with this
definition, the proposed regulations would
have defined cash tips to include “tips
received from customers or, in the case of
an employee, through a mandatory or vol-
untary tip-sharing arrangement, such as a
tip pool.”
Some commenters requested more
guidance on tip-sharing arrangements.
One commenter asked that the final reg-
ulations distinguish between a voluntary
customer tip received by an employee, a
mandatory service charge imposed by the
employer, and an employer-mandated tip
pool that redistributes tips. The definition
of cash tips in the proposed regulations
would have included both tips received
<?>7
Form W-9, Request for Taxpayer Identification Number and Certification, instructs both sole proprietorships and single-member LLCs (not treated as a corporation) to include the individ-
ual name of the owner on line 1. Therefore, if the payee completes Form W-9 correctly, and the payor correctly uses the info on Form W-9 to complete the appropriate Form 1099, then the
individual’s name should appear on the Form 1099. However, this rule is intended to clarify that if the instructions change or if the form is incorrectly filled out and includes only the business
name, the reporting statement is still considered to be issued to the owner of the sole proprietorship or single-member LLC.

Bulletin No. 2026–18 855 April 27, 2026
through “a mandatory or voluntary
tip-sharing arrangement,” and this is con-
sistent with the broad statutory language
that defines cash tips to include tips
received under any tip-sharing arrange-
ment. The final regulations contain sim-
ilar language with nonsubstantive revi-
sions.
One commenter asked for more guid-
ance concerning staff who participate in
tip-sharing arrangements but who may
not be listed specifically in the List of
Occupations that Receive Tips. The
Treasury Department and the IRS con-
sidered the language in section 224(d)
(3) to indicate that, for purposes of the
deduction for qualified tips under sec-
tion 224, there is no distinction between
employees in occupations receiving tips
directly from customers and employees
in occupations receiving tips through
tip-sharing arrangements with other
employees. However, the employee must
still receive the tips in an occupation that
customarily and regularly received tips
on or before December 31, 2024. Par-
ticipation in a tip-sharing arrangement
by itself is not sufficient. The employee
must also be in an occupation on the List
of Occupations that Receive Tips, and all
other statutory and regulatory require-
ments must be met. No additional lan-
guage was added to the final regulations
to address this comment.
A few commenters were concerned
about State laws on tip-sharing arrange-
ments such as tip pooling. One com-
menter wanted the regulations to clarify
that employees on the List of Occupa-
tions that Receive Tips are eligible for
the deduction, even if they work in a
State that prohibits or restricts tip pool-
ing. Another commenter requested that
the regulations provide that they preempt
State laws concerning tip pooling. Noth-
ing in section 224 prohibits an individual
from claiming the deduction because of
State law involving tip-sharing arrange-
ments such as tip pooling. However, sec-
tion 224 is a Federal income tax deduc-
tion. It does not impact Federal or State
laws concerning tip-sharing arrange-
ments. Since these rules are a function
of existing laws and outside the scope of
these regulations, no language was added
to the final regulations concerning this
comment.
10. Married Individuals and Social
Security Numbers
Section 224(b)(1) limits the deduc-
tion for qualified tips to an amount not to
exceed $25,000 in a taxable year. Section
224(b)(2) further limits the amount of the
deduction based on a taxpayer’s modified
adjusted gross income, with the deduction
phasing out for taxpayers with modified
adjusted gross income over $150,000
($300,000 for joint filers). Section 224(f)
provides that if the taxpayer is a married
individual within the meaning of section
7703, section 224 applies only if the tax-
payer and the taxpayer’s spouse file a joint
return for the taxable year.
Reflecting these statutory provisions,
the proposed regulations would have pro-
vided that the total amount of qualified
tips that can be deducted on a return per
calendar year is $25,000, regardless of
filing status. After applying the $25,000
limitation, the proposed regulations would
have provided that the amount is subject
to the phase-out based on the taxpayers’
modified adjusted gross income described
in section 224(b)(2). Finally, the proposed
regulations would have provided that tax-
payers who are married must file a joint
return to claim the deduction allowed by
section 224.
Several commenters asserted that the
$25,000 maximum annual deduction
should apply per spouse on a joint return.
They argued that limiting the deduction
to $25,000 in this instance penalizes
married individuals and unfairly disad-
vantages joint filers when both spouses
work in tipped occupations. These com-
menters also noted that households with
two tipped workers face higher work-re-
lated costs and should have a higher cap.
At least one commenter agreed with the
position in the proposed regulations that
the maximum deduction should be lim-
ited to $25,000 per return, regardless of
filing status.
Section 224(b)(1) limits the amount
of the deduction to $25,000 for any
taxable year, without reference to fil-
ing status. Consistent with this stat-
utory language, the final regulations
maintain the position of the proposed
regulations that the maximum annual
deduction for an individual or a joint
return is $25,000.
One commenter asked that the IRS
consider indexing this threshold to
updated cost-of-living and inflation fac-
tors or increasing the threshold outright to
$200,000/$300,000 to ensure the deduc-
tion effectively benefits the intended mid-
dle-class earners and families. Because
such indexing is not provided for in
section 224, the final regulations do not
include this suggestion.
One commenter opposed requiring
married individuals to file jointly in order
to be eligible for the deduction. Because
section 224(f) requires married individu-
als to file jointly in order to be eligible for
the deduction, the final regulations retain
this rule.
In accordance with section 224(e), the
proposed regulations would have pro-
vided that to claim a deduction under sec-
tion 224, a taxpayer must include on the
taxpayer’s tax return a valid for work SSN
(valid SSN) that was issued before the due
date of the return (including extensions).
The proposed regulations would have
further provided that married taxpayers
are required to include the valid SSN of
the taxpayer who has received the tips to
claim the deduction, and a valid SSN is
required of both taxpayers only when both
have qualified tips for which the deduc-
tion is being claimed.
One commenter stated that the SSN
requirement risks disproportionate exclu-
sion of immigrant and informal workers
and could incentivize underreporting or
off-the-books arrangements and suggested
providing an Individual Taxpayer Identi-
fication number (ITIN) safe harbor illus-
tration. Another commenter said that the
IRS should not impose a requirement that
both spouses use SSNs. Finally, one com-
menter asked that the regulations include
easy examples showing what to do when
only one spouse receives tips and what to
keep on file if someone moves from ITIN
to SSN during the year, so they do not lose
the deduction.
The valid SSN requirements are statu-
tory. Consistent with these statutory pro-
visions, the final regulations contain the
same requirements as the proposed reg-
ulations. Income tax return instructions
will include information and examples
for how to claim the deduction, includ-
ing how married taxpayers filing jointly
claim the deduction if just one spouse has

April 27, 2026 856 Bulletin No. 2026–18
tip income. If a taxpayer is issued a valid
SSN for the calendar year in which the
taxpayer is claiming the deduction under
section 224, the taxpayer may use all qual-
ified tips received in that calendar year in
determining the deduction, as long as the
taxpayer includes the valid SSN on the
taxpayer’s return for that year. The final
regulations reflect this clarification.
Another commenter suggested that
the regulations explicitly bar noncitizens
from being eligible for the section 224
deduction. Section 224(e) prohibits the
deduction unless the taxpayer’s valid SSN
is listed on the return claiming the deduc-
tion. As the proposed regulations would
have done, the final regulations include
this prohibition. However, certain nonciti-
zens are eligible to obtain valid SSNs and
therefore would be eligible for the section
224 deduction.
11. Self-Employed Individuals
In accordance with 224(c), the pro-
posed regulations provide that generally
for self-employed taxpayers, the deduc-
tion under section 224 for a trade or
business is limited to the individual’s net
income (without regard to the section 224
deduction) from that trade or business.
Several commenters had questions
concerning how to determine net income
for purposes of section 224(c). One com-
menter asked that the regulations confirm
that the deduction cannot create or increase
a loss. Another commenter requested that
the regulations explicitly state whether the
self-employed health insurance deduc-
tion, the one-half of self-employment tax
deduction, and the self-employed retire-
ment deduction are allocable to the trade
or businesses for purposes of section
224(c). Another commenter requested
precise guidance, with illustrative exam-
ples, on how “net income” should be cal-
culated for a sole proprietor filing Sched-
ule C, specifically clarifying whether this
figure is before or after the deduction of
ordinary and necessary business expenses
(like booth rent, supplies, and self-em-
ployment tax).
Consistent with section 224(c), the
proposed regulations would have pro-
vided that the section 224 deduction can-
not create or increase a loss. Whether any
particular deduction, such as the self-em-
ployed health insurance deduction, the
one-half of self-employment tax deduc-
tion, and the self-employed retirement
deduction, is allocable to a trade or busi-
ness for purposes of section 224(c) is a
question that is beyond the scope of these
regulations. However, section 224(c) is
clear that the qualified tip deduction is
not allocable to a trade or business for
purposes of this section. For any individ-
ual performing services in a trade or busi-
ness (other than as an employee), such as
a sole proprietor filing a Schedule C, the
deduction for qualified tips under section
224 for that trade or business is limited to
the amount remaining after gross income
from the trade or business, including
the qualified tips received in the course
of the trade or business, is reduced by
the deductions allocable to the trade or
business in which the tips are received,
which, in the case of a sole proprietor
filing a Schedule C, would include the
expenses deducted on the Schedule C for
that trade or business.
Some commenters had general ques-
tions about independent contractors. One
commenter stated that gig workers who
are considered independent contractors
should qualify for this deduction as the
tips are a part of the job. Another com-
menter asked that the regulations provide
a short example involving an independent
contractor with more than one occupation
(for example, at a salon and a separate
makeup service) to demonstrate how to
allocate tips and apply the $25,000 deduc-
tion maximum. One commenter asked
that the regulations provide formal tran-
sition relief for self-employed individuals
allowing for a “reasonable estimate” of
qualified tips received between January 1,
2025, and the publication date of the final
rule.
Gig workers can qualify for this
deduction if their occupation is on the
List of Occupations that Receive Tips
and the other statutory and regulatory
requirements of section 224 are met. The
$25,000 maximum deduction is applied
per tax return and is not applied sepa-
rately to different occupations for a tax-
payer, or spouses in the case of spouses
filing jointly, with multiple occupations.
Instructions for how to apply the $25,000
maximum deduction limitation when
claiming the deduction are beyond the
scope of these regulations but will be
provided in instructions to income tax
returns. Transition relief for individuals
claiming the deduction under section 224
in tax year 2025 is provided in Notice
2025-69. Because these comments are
addressed elsewhere in the final regu-
lations, as well as in other guidance, no
additional changes were made to the final
regulations to address these comments.
12. Other Comments
A few commenters asked that the final
regulations address certain situations
where children receive tips. One com-
menter suggested that the regulations
address child digital content creators and
the deduction’s applicability as it relates
to parents claiming the income of their
social media influencer children. Another
commenter suggested rules that exclude
parents who “tip” their child’s business
with large amounts to effectively increase
gift tax (and similar tax) exemption lim-
its. These comments are beyond the scope
of these regulations. Nothing in section
224 nor these regulations change the rules
governing the reporting and treatment of
income received by children or the rules
regarding gift taxes.
13. Severability
If any provision in this rulemaking
is held to be invalid or unenforceable
facially, or as applied to any person or
circumstance, it shall be severable from
the remainder of this rulemaking, and
shall not affect the remainder thereof, or
the application of the provision to other
persons not similarly situated or to other
dissimilar circumstances.
Applicability Dates
These regulations apply for taxable
years beginning after December 31, 2024.
As stated in the NPRM, taxpayers may
rely on the proposed regulations for tax-
able years beginning after December 31,
2024, and on or before the date these reg-
ulations are published as final regulations
in the Federal Register, provided that
taxpayers follow the proposed regulations
in their entirety and in a consistent man-
ner.

Bulletin No. 2026–18 857 April 27, 2026
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 final regulations have been desig-
nated by the Office of Management and
Budget’s (OMB’s) Office of Information
and Regulatory Affairs (OIRA) as subject
to review under Executive Order 12866
pursuant to the Memorandum of Agree-
ment (MOA, July 4, 2025) between the
Treasury Department and the Office of
Management and Budget regarding review
of tax regulations. OIRA has determined
that the final rulemaking is economically
significant under section 3(f)(1) of Exec-
utive Order 12866 and subject to review
under Executive Order 12866 and section
1(c) of the Memorandum of Agreement.
Accordingly, the final 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,
18
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 final regulations clarify the defini-
tion of “qualified tips” for purposes of the
income tax deduction under section 224.
As required by section 70201(h) of the
OBBBA, the final regulations also pro-
vide the list of occupations that customar-
ily and regularly received tips on or before
December 31, 2024 (List of Occupations
that Receive Tips). The purpose of these
final regulations is to provide guidance
on requirements of section 224 to claim
the deduction, including the definition
of “cash tips;” the requirement for the
taxpayer to include on the tax return for
the taxable year such individual’s Social
Security number (SSN); and the require-
ment that if the taxpayer is married (within
the meaning of section 7703), that section
224 shall apply only if the taxpayer and
the taxpayer’s spouse file a joint return
for the taxable year. The final regulations
also clarify that the deduction is limited to
$25,000, regardless of the taxpayer’s filing
status, and that the deduction is reduced
based on the taxpayer’s modified adjusted
gross income for that taxable year after
applying the $25,000 limitation.
I. The Statute and Final 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 arrangement. The final
regulations clarify that “cash tips” are
amounts received, directly or indirectly,
from customers, including in the case of
an employee, tips received through a man-
datory or voluntary tip-sharing arrange-
ment, that are paid in a cash medium of
exchange, including by check, credit card,
debit card, gift card, tangible or intangi-
ble 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 applica-
tion that is denominated in cash. The
final regulations also clarify that, for the
purposes of section 224, cash tips also
include amounts paid in foreign currency.
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. For purposes of section
224, cash tips also do not include digital
assets as defined in section 6045(g)(3)(D)
and § 1.6045-1(a)(19).
Section 224(a) allows qualified tips to
be deducted if they are included on Form
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.” The final regulations clarify that
statements furnished to a sole proprietor-
ship or a single-member LLC owned by
a tip recipient are considered furnished to
the tip recipient owner of the sole propri-
etorship or a single-member LLC to which
the statement was issued, regardless of
whether the name of the sole proprietor-
ship or single-member LLC appears as the
recipient on the statement.
In addition, employees that enter a
Tipped Employee Participation Agree-
ment as part of the IRS Tip Rate Deter-
mination Agreement (TRDA) program or
a Model Gaming Employee Tip Report-
ing Agreement as part of the IRS Gam-
ing Industry Tip Compliance Agreement
(GITCA) program report their tips accord-
ing to tip rates established under their
agreement (and these tips are included on
Form W-2). The final regulations 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 final regulations clarify that the
section 224(d)(2)(A) term “qualified tips”
only includes amounts that are paid by the
18
References to a “section” are to a section of the Internal Revenue Code of 1986, as amended (Code), unless otherwise indicated.

April 27, 2026 858 Bulletin No. 2026–18
customer voluntarily without any impact
on the scope or cost of service or any
other consequence in the event of non-
payment, are not the subject of negotia-
tion, and are determined by the customer.
The final 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, “qual-
ified tips” may include tips received for
a service that is legal but while working
for an establishment that violates appli-
cable law in other respects.) In addition,
the final regulations provide that amounts
received for prostitution services and por-
nographic activity are not included in the
definition of “qualified tips.” The final
regulations provide that amounts received
by a manager or supervisor through a vol-
untary or mandatory tip-sharing arrange-
ment such as a tip pool are not qualified
tips, but amounts received directly by a
supervisor or manager for services pro-
vided in the course of duties performed
in an occupation included on the List of
Occupations that Receive Tips are qual-
ified tips if all other regulatory require-
ments are met. The final regulations also
clarify that a payment is not considered
a “qualified tip” if, based on all relevant
facts and circumstances, the payments
represent a recharacterization of wages or
payments for services as tips for purposes
of claiming the deduction under section
224. Furthermore, the final regulations
provide that if the following facts and cir-
cumstances are present, there is an irre-
buttable presumption that the amount paid
is a recharacterization of wages, payment
for services, or other income as tips, and
therefore cannot be a qualified tip: (A) the
employer of an employee is the payor of a
cash tip received by the employee; or (B)
the tip recipient has a direct ownership
interest in the payor of a cash 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 their trade or busi-
ness minus the sum of their deductions
(other than the deduction for qualified
tips) that are allocable to that trade or busi-
ness. The final regulations clarify that the
deduction for qualified tips is not included
when calculating this limit because it is
not a trade or business deduction.
The final regulations clarify the require-
ment in section 224(e) that taxpayers 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 Num-
ber (ITIN) rather than an SSN will not be
able to use their tips to claim the deduction
under section 224. The final regulations
also clarify that a taxpayer must be issued
an SSN, as defined in section 24(h)(7) of
the Code, before the due date of the income
tax return (including extensions) for the
calendar year in which the taxpayer is
claiming 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 deduction;
if both spouses earned qualified tips for
the deduction, then they must include the
SSNs of both spouses on their tax return.
The final regulations clarify section 224(f),
which requires married individuals (within
the meaning of section 7703) to file a joint
tax return for the taxable year to claim the
deduction for qualified tips.
Section 224(b)(1) limits the deduction
for qualified tips for any taxable year to
$25,000. The final regulations clarify that
this limitation applies regardless of the tax-
payer’s filing status for that taxable 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 phase-
out as adjusted gross income of the tax-
payer for the taxable year plus any amount
excluded from gross income under section
911, section 931, or section 933. The final
regulations clarify that the phaseout based
on MAGI is applied after applying the
$25,000 limit to the deduction.
The final 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 Code) that is related to the occu-
pation. The final regulations also clarify
that these occupations include individu-
als acting as assistants or apprentices to
the listed occupations to the extent they
perform the described services.
II. Baseline
The Treasury Department and the IRS
have assessed the benefits and costs of
the final regulations relative to a no-ac-
tion baseline reflecting anticipated Fed-
eral income tax-related behavior in the
absence of these final 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 final regulations affect taxpay-
ers who wish to claim the deduction 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 esti-
mate 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 Final
Regulations
The Treasury Department and the IRS
analyzed the economic effects of the final
regulations in enumerating the list of
occupations that customarily and regularly
received tips on or before December 31,
2024, the clarification that “qualified tips”
excludes tips received while performing
services that are misdemeanors or felo-
nies under applicable law, and the clarifi-
cation 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 economic costs
and benefits of these final regulations are
small.

Bulletin No. 2026–18 859 April 27, 2026
i. List of Occupations that Receive Tips
The final 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 final 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.R. 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 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 the ser-
vice industry, and the individuals working
in the occupations either interacted with
the customers for whom they were provid-
ing a service or commonly participated in
tip-sharing arrangements with individuals
who interacted with customers.
The List of Occupations that Receive
Tips includes some occupations, such as
cooks and dishwashers, in which individ-
uals may not interact with customers but
reported receiving tip income, presumably
from tip-sharing arrangements with indi-
viduals who do interact with customers.
Employees in these occupations have not
been considered to customarily and regu-
larly receive tips under the FLSA. As dis-
cussed above, there are many differences
between the specific language, purpose,
and history of the FLSA tip provisions and
the language, purpose, and history of the
deduction for qualified tips under section
224 of the Code.
19
For instance, while the
FLSA contemplates that an employee must
have some level of customer interaction to
“customarily and regularly” receive tips,
20

section 224(d)(3) provides that for purposes
of the deduction for qualified tips under
section 224, “cash tips” includes both tips
received from customers and, in the case
of an employee, tips received under any
tip-sharing arrangement. As a result, occu-
pations in which employees receive tips
from tip-sharing arrangements are consid-
ered as having “customarily and regularly”
received tips for purposes of the deduction
for qualified 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, an occupation title, a
short description of the types of services
performed by individuals working in the
occupation, illustrative examples of spe-
cific occupations that would be included
under the occupation code, and the related
SOC Code(s).
b. Alternative Methods Considered
In addition to the method described
above, the Treasury Department and the
IRS considered two alternative methods
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 methods both excluded
some occupations that did customarily
and regularly receive tips on or before
December 31, 2024, and also included
some occupations that did not in reality
customarily and regularly receive tips
on or before December 31, 2024. There-
fore, the approach to produce the List of
Occupations that Receive Tips included in
these final regulations was selected over
the alternatives described below.
One of the alternative methods that the
Treasury Department and the IRS consid-
ered to construct the List of Occupations
that Receive Tips was to use the occupa-
tion definitions from the SOC Code sys-
tem.
21
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
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
19
See supra, “Comments on the Methodology Used to Construct the List of Occupations that Receive Tips.”
20
See Montano v. Montrose Rest. Assocs., 800 F.3d 186, 189-194 (5th Cir. 2015) (holding that a factfinder could determine that an employee did not “customarily and regularly receive tips,”
despite the fact that the employer included him in a tip pool).
21
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 Code documents can be found at https://www.bls.gov/soc.

April 27, 2026 860 Bulletin No. 2026–18
occupation that customarily and regularly
receives tips. Thus, if the “Animal Care-
takers” 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 cor-
responding SOC Code, even though they
do not customarily and regularly receive
tips. Thus, using the SOC Code 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 Code system,
the Treasury Department and the IRS
created 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 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 their signature on Form 1040. Individ-
uals in some occupations, such as ride-
share drivers, often operate as independent
contractors rather than employees and do
not receive Form W-2 or file Form 4137.
Thus, using only the income tax return data
would have omitted these occupations,
even though individuals in such occupa-
tions did in fact regularly and customar-
ily receive tips on or before December
31, 2024. In addition, the analysis of the
income tax return data may have incom-
plete information on certain occupations
due to variations in how taxpayers choose
to self-report their occupation on Form
1040. For example, the self-reported occu-
pation may have typos or abbreviations, or
taxpayers may write multiple occupations
separated by a comma or a slash mark,
like “Occupation 1/Occupation 2.”
22
These
variations in how taxpayers reported their
occupation on Form 1040 made it difficult
for the data analysis to capture all taxpay-
ers 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 have more vari-
ations 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.R. 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 Stan-
dard Occupation Classification (SOC)
Code(s) (Related SOC Code(s)). (As pre-
viously described, the List of Occupations
that Receive Tips in Table 1 of the final
regulations also includes descriptions
and illustrative examples of each TTOC
occupation.) Table A summarizes tax-
payer 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 Busi-
ness (Sole Proprietorship),” or Schedule
F, “Profit or Loss From Farming;” and did
not have non-passive income from a part-
nership or an S-corporation on Schedule
E, “Supplemental Income and Loss (From
rental real estate, royalties, partnerships,
S corporations, estates, trusts, real estate
mortgage investment conduits, etc.).”
23

Table A shows the percentage of indi-
viduals within the Related SOC Code(s)
24

who have at least $100 of tips reported on
Form W-2 or Form 4137. For example,
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.
The table 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 percentage 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 example, 34.3 percent of all
reported tips are from individuals who had
the SOC Code related to the TTOC Occu-
pation Title of “Wait Staff.”
Lastly, Table A shows reported tips as a
percent of wage compensation for individu-
als in Related SOC Code(s) who had reported
tips. Wage compensation is the sum of
wages, tips, and other compensation 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 Occupation Title of “Gambling
Dealers” who had reported tips on Form W-2
or Form 4137, reported tips were 70.7 per-
cent of wage compensation.
22
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.”
23
Since tips are reported separately from other compensation for employees but not for the self-employed in the current tax return data, these screening criteria that limit the sample to employ-
ees with a single job were utilized to better illuminate the link between the self-reported occupations and reported tips.
24
Table A shows statistics based on the Related SOC Code(s), not on the TTOC, which may differ from the Related SOC Code(s). For example, the statistics listed under TTOC 506 (Pet and
Show Animal Caretakers) shows the statistics for all taxpayers in the Related SOC Code 39-2021 (Animal Caretakers), including taxpayers whose occupations are not included in TTOC
506, such as zookeepers. As described in the preamble to the proposed regulations, some SOC Codes were narrowed in the creation of the TTOC occupation. Certain occupations grouped in
the same SOC Code with non-tipped occupations were segregated from these non-tipped occupations and provided their own TTOC occupation category. Therefore, the lower percentages
for certain TTOC occupation categories may be because the data on the percentage of individuals reporting tips is for the wider related SOC Code, not for the narrower TTOC occupation.
In addition, that data included in Table A reflects only data for employees and does not provide tipping data for independent contractors. The lack of representation for tipped independent
contractors may skew the percentage of individuals reporting tips lower in certain occupations.

Bulletin No. 2026–18 861 April 27, 2026
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 Code
(Related SOC Code)
Beverage & Food Service
101Bartenders82.89.863.435-3011
102Wait Staff74.534.363.535-3031
103
Food or Beverage Servers,
Nonrestaurant
30.40.133.035-3041
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 Dealers70.94.370.739-3011, 39-1013
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

April 27, 2026 862 Bulletin No. 2026–18
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 Code
(Related SOC 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 Planners6.60.118.013-1121
503
Private Event and Portrait
Photographers
2.3*22.027-4021
504Private Event Videographers***27-4031
505Event Officiants0.2*16.821-2011
506Pet and Show Animal Caretakers19.10.316.239-2021
507Tutors0.5*34.525-3041
508Nannies and Babysitters0.7*28.839-9011
509Visual Artists3.3*28.427-1013
510Floral Designers4.3*7.427-1023
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
606Eyebrow and Eyelash Technicians53.23.022.639-5012
607Makeup Artists13.1*14.839-5091
608
Exercise Trainers and Group Fitness
Instructors
1.0*25.839-9031
609Tattoo Artists and Piercers11.1*15.827-1019
610Tailors0.8*15.951-6052
611
Shoe and Leather Workers and
Repairers
***51-6041

Bulletin No. 2026–18 863 April 27, 2026
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 Code
(Related SOC Code)
Recreation & Instruction
701Golf Caddies8.0*27.939-3091
702Self-Enrichment Teachers1.9*7.525-3021
703Recreational and Tour Pilots***53-2012
704Tour Guides14.2*17.139-7011
705Travel Guides13.3*16.239-7012
706Sports and Recreation Instructors1.9*7.525-3021
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
810Gas Pump Attendant0.7*15.453-6031
Total67.5
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 Form 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 Form W-2 sometimes enter an occupation (character string) that does not
correspond to the Form 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, December 18, 2025

April 27, 2026 864 Bulletin No. 2026–18
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 final regula-
tions, two taxpayers with otherwise sim-
ilar tax situations would face uncertainty
as to whether this tax deduction applies
to their situation. In the absence of this
guidance, these taxpayers might make
different choices as to whether their tips
qualify for the deduction, and, therefore,
face different tax liability. By enumerating
the List of Occupations that Receive Tips,
these final 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 receive $10,000 in tips from custom-
ers 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
25
received tips on or
before December 31, 2024. Thus, prior
to reading the guidance in these final
regulations, Employee B might have
been unsure whether their occupation as
a makeup artist makes them eligible to
claim the deduction for their 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 final 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 per-
forming services in human trafficking,
exotic pet smuggling, counterfeiting or
fencing stolen goods, drug trafficking,
drug dealing, and unlicensed 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 deter-
mine the behavioral effects of the clari-
fication 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 avail-
able data and models to assess the eco-
nomic costs and benefits of excluding
these tips from the definition of “qual-
ified tips,” but the economic impact is
expected to be low.
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 alco-
hol without a license is a misdemeanor.
They receive $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
bartender without the proper license vio-
lates the applicable law. Because the final
regulations clarify that the definition of
“qualified tips” excludes tips received
while performing services that violate
the applicable law, Employee C is aware
that their $10,000 in tips received while
serving alcohol without a license are not
qualified tips, and so they cannot 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 final 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
their $10,000 in tips are considered “qual-
ified tips” and they can claim the deduc-
tion accordingly.
The clarification in the final regula-
tions, 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 final 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
dealers at Casino 3, and they both have a
tip agreement as part of the GITCA pro-
gram. 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 occu-
pation in the tip agreement requires them
to report $10,000 in tips. The Forms W-2
for Employee E and Employee F from
Casino 3 each report $10,000 in tips. Due
to the clarification in the final regulations
25
Initial drafts of the OBBBA legislation contemplated a deduction for tips received by individuals in occupations that traditionally and customarily receive tips, but this language was later
revised to refer to occupations that customarily and regularly receive tips.

Bulletin No. 2026–18 865 April 27, 2026
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 final regulations would be
small.
II. Paperwork Reduction Act
This final 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 information
collection requirements and their associ-
ated burden.
III. Regulatory Flexibility Act
The Secretary of the Treasury certifies
that these final regulations will not have a
significant economic impact on a substan-
tial number of small entities pursuant to
the Regulatory Flexibility Act (5 U.S.C.
chapter 6). This certification is based
on the fact that these regulations do not
impose any new requirements on small
entities but rather provide to 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 clarity on the definition of qual-
ified tips. Because the regulation does not
directly impact small entities a Regulatory
Flexibility Act (5 U.S.C. chapter 6) analy-
sis is not required.
One commenter asked that the final
regulations take special account of the
needs of small businesses and that the
final regulations not certify that the rule
will not have a significant impact on a
substantial number of small entities if the
final regulations provide details concern-
ing recordkeeping or other obligations
of employers. These final regulations do
not provide information or instructions
concerning the recordkeeping and other
obligations of employers and for this rea-
son they have been certified not to have a
significant impact on a substantial number
of small entities.
IV. Section 7805(f)
Pursuant to section 7805(f) of the
Code, the proposed regulations were sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on their impact on small busi-
ness. No comments were received.
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
government, in the aggregate, or by the
private sector, of $100 million in 1995
dollars, updated annually for inflation.
These final 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 Executive
order. These final regulations do not have
federalism implications,
VII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs desig-
nated this rule as a major rule, as defined
by 5 U.S.C. 804(2).
Drafting Information
The principal author of these final reg-
ulations is the Office of Associate Chief
Counsel (Employee Benefits, Exempt
Organizations and Employment Taxes).
However, other personnel from the Trea-
sury Department and the IRS participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS amend 26 CFR part 1 as fol-
lows:
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. Add § 1.224-1 under the undes-
ignated center headings “Additional Item-
ized Deductions for Individuals” to read
as follows:
Section 1.224-1 is added to read as fol-
lows:

April 27, 2026 866 Bulletin No. 2026–18
§ 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) of the Code 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 section 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 for the taxable
year increased by any amount excluded
from gross income under section 911, sec-
tion 931, or section 933 of the Code.
(3) Examples. The following examples
illustrate the rules of paragraphs (b)(1)
and (2) of this section.
(i) 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 is further reduced under sec-
tion 224(b)(2) by $5,000 ($100 x 50), from $25,000
to $20,000.
(ii) Example 2. Employee B satisfies all the
requirements under section 224 and Employee B’s
filing status for 2025 is single. B received $10,000
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. B’s modified
adjusted gross income for 2025 is $180,000. B’s
deduction is reduced (but not below zero) by $100
for each $1,000 by which B’s modified adjusted
gross income exceeds $150,000 (the threshold for
a single filer). B’s modified adjusted gross income
exceeds $150,000 by $30,000. To calculate the
deduction, B first divides $30,000 by $1,000 to get
30. Thus, B’s deduction under section 224(b)(2)
is reduced by $3,000 ($100 x 30), from $10,000
to $7,000.
(iii) Example 3. Taxpayers C and D are married,
as defined in section 7703 of the Code, 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, and sat-
isfy all other requirements under section 224. C
receives $15,000 in qualified tips in 2025, and D
receives $20,000 in qualified tips in 2025. Since the
combined amount of their qualified tips is greater
than the $25,000 limitation in paragraph (b)(1) of
this section, the total qualified tip amount is first
reduced from $35,000 to $25,000. C and D’s mod-
ified adjusted gross income for 2025 is $200,000.
Since this amount is less than the $300,000 modi-
fied joint adjusted gross income threshold for joint
filers, the limitation in paragraph (b)(2) of this sec-
tion does not apply and no further reduction in the
qualified tip amount is necessary.
(c) Qualified tips defined—(1) In gen-
eral. Subject to the requirements in this
paragraph (c), qualified tips are amounts
received as cash tips (as defined in para-
graph (c)(2) of this section) by an indi-
vidual in an occupation that customarily
and regularly received tips on or before
December 31, 2024, as provided in para-
graph (h) of this section.
(2) Cash tips defined. For purposes of
paragraph (c)(1) of this section, cash tips
are tips received, directly or indirectly,
from payors, as defined in paragraph (c)
(5) of this section, including, in the case of
an employee, tips received 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. For purposes of this paragraph (c)
(2), cash tips also include amounts paid in
foreign currency. 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. For purposes of
this paragraph (c)(2), cash tips also do not
include digital assets as defined in section
6045(g)(3)(D) of the Code and § 1.6045-
1(a)(19).
(3) Tips defined. For purposes of
paragraph (c)(2) of this section, tips are
amounts paid by payors, as defined in
paragraph (c)(5) of this section, for ser-
vices 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 trans-
action. Superficial or nominal tokens of
appreciation from the tip recipient that
are negligible in value, such as a written
message of thanks sent to the recipient or
publicly displayed, do not alter the nature
of the contribution as a qualified tip.
(4) Amounts must be paid volun-
tarily. Amounts are qualified tips only to
the extent they are paid voluntarily and
without any consequence in the event
of nonpayment (including any impact
on the scope or cost of service), are not
the subject of negotiation, and are deter-
mined by the payor. Qualified tips must
be paid without compulsion. Thus, ser-
vice charges, automatic gratuities and any
other mandatory amounts automatically
added to a customer’s (i.e., the payor’s)
bill by the vendor or establishment are
not qualified tips, even if the amounts are
subsequently distributed to employees.
Any amount voluntarily paid in excess of
such mandatory amounts is a qualified tip
if all other requirements for a qualified tip
under this section are met. If a customer is
expressly provided an option to disregard
or modify amounts (including to zero)
added to a bill, such amounts are not man-
datory amounts.
(5) Payor defined. For purposes of this
section, “payor” means the ultimate recip-
ient of the services. In most cases, this
is the customer, client, or other service
recipient. An entity, such as an employer,
a third party settlement organization, or
a sole proprietorship or single-member
limited liability company through which
a tip recipient is doing business, that acts
as conduit to remit a tip initially paid by a
customer, client, or service recipient to the
tip recipient, is not a payor of the tip for
purposes of this section.
(6) 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

Bulletin No. 2026–18 867 April 27, 2026
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.
(7) 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.
(8) Prostitution. Any amount received
for prostitution services is not a qualified
tip.
(9) Pornography. Any amount received
for pornographic activity is not a qualified
tip.
(10) Managers and Supervisors.
Amounts received by a manager or
supervisor through a voluntary or man-
datory tip-sharing arrangement such as a
tip pool are not qualified tips. However,
amounts received directly by a supervi-
sor or manager for services they provided
in the course of duties performed in an
occupation that customarily and regu-
larly received tips on or before December
31, 2024, as provided in paragraph (h) of
this section, are qualified tips if all other
requirements of this section are met.
(11) Anti-abuse. An amount is not a
qualified tip if, based on all relevant facts
and circumstances, such amount rep-
resents a recharacterization of wages or
payments for goods or services as tips for
purposes of claiming the deduction.
(i) Facts and circumstances that may
indicate a recharacterization of wages,
payment for services, or other income as
tips include the following:
(A) A charge for services shown on an
invoice is less than the payment from the
payor shown on a related receipt or infor-
mation return, and the cash tip reported on
the receipt or information return is in an
amount that approximates the difference
between the charge amount shown on
the invoice and payment amount on the
receipt or information return; or
(B) A significant shift in historical tip-
ping or payment practices between the
payor and the tip recipient.
(ii) When the following facts and cir-
cumstances are present, there is an irre-
buttable presumption that the amount paid
is a recharacterization of wages, payment
for services, or other income as tips, and
therefore cannot be a qualified tip:
(A) The employer of an employee is
the payor, as defined in paragraph (c)(5)
of this section, of a cash tip received by
the employee; or
(B) The tip recipient has a direct own-
ership interest in the payor, as defined in
paragraph (c)(5) of this section, of a cash
tip. For purposes of this paragraph (c)(11)
(ii)(B), an ownership interest means in
the case of a corporation, ownership (by
vote or value) of five percent or more of
the stock in such corporation; in the case
of a partnership, ownership of five percent
of the profits interest or capital interest
in such partnership, or in any other case,
ownership of more than five percent of the
beneficial interests in the entity. An own-
ership interest is tested as of the date the
tip is received. For purposes of this para-
graph (c)(11)(ii)(B), an ownership interest
is a direct ownership interest if it is an
ownership interest held directly by the tip
recipient or if it is an ownership interest
held through an entity disregarded as sep-
arate from its owner for Federal income
tax purposes; an ownership interest held
through a qualified subchapter S subsidi-
ary as defined in section 1361(b)(3) of the
Code; an ownership interest held through
a grantor trust (under subpart E of part 1 of
subchapter J of charter 1 of the Code); or
an ownership interest held through a cus-
todian, broker, nominee, agent, or other
similar intermediary.
(12) Examples. The following exam-
ples illustrate the rules of this paragraph
(c). Unless otherwise indicated, each
example assumes that other requirements
for claiming the deduction under section
224 are satisfied and that references to
a customer are references to a payor, as
defined in paragraph (c)(5) of this section.
(i) 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 quali-
fied tip for purposes of the deduction under section
224.
(ii) Example 2. The facts are the same as in para-
graph (c)(12)(i) 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)(12)(i) 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.
(iii) 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.
(iv) 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 applica-
ble 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.
Customer 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 Customer F was expressly provided the option
to leave no tip. Under these circumstances, the 18%
amount is a qualified tip. The result would be the
same if Customer F were instead prompted with a tip
slider that could reduce the tip down to zero; if the tip
slider was subject to a minimum floor amount, only
amounts above that floor could constitute a qualified
tip.
(v) Example 5. The facts are the same as in para-
graph (c)(12)(iv) of this section (Example 4), but the
only 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. Customer F did not voluntarily determine the
amount of the additional charge because Customer
F was forced to select an amount greater than zero.
Customer F was not expressly provided an option

April 27, 2026 868 Bulletin No. 2026–18
to disregard or modify the amounts presented. Cus-
tomer F did not make the payment free from com-
pulsion. Under these circumstances, the 15% charge
is not a qualified tip for purposes of the deduction
under section 224.
(vi) Example 6. The facts are the same as in
paragraph (c)(12)(v) 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.
(vii) 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. Self-employed Painter
G can only deduct the 10% cash tip, however, to the
extent the other requirements of the statute are met,
including that the 10% cash tip is included on a Form
1099 that Painter G receives.
(viii) Example 8. Shuttle Driver S enters into a
contract with Customer Q. Under the terms of the
contract, 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 con-
tract 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 arriv-
ing at the airport, Customer Q pays Shuttle Driver
S an additional $5. The 20% gratuity is not a quali-
fied tip because it 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 without compulsion and is a qual-
ified tip for purposes of this section. Shuttle Driver
S can deduct the tip, however, only to the extent the
other requirements of the statute are met, including
that the tip is included on an information return fur-
nished to Shuttle Driver S, or properly reported by
Shuttle Driver S on Form 4137.
(ix) Example 9. The facts are the same as in para-
graph (c)(12)(viii) of this section (Example 8) except
the terms of the contract state that Shuttle Driver S
will drive Customer Q to the airport for $60 and that
a recommended 15% tip will be added to the total
cost on the bill for convenience. The contract further
states that the payment of this recommended tip is
subject to the complete discretion of Customer Q and
may be increased, decreased or eliminated entirely
by Customer Q. After arriving at the airport, Cus-
tomer Q pays Shuttle Driver S the $60 and decides to
include the recommended 15% tip. The 15% gratuity
is a qualified tip because Customer Q had the option
to change the tip amount and the option to leave no
tip amount at all, with no consequence to the services
provided or the cost of the service.
(x) Example 10. 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.
(xi) Example 11. Digital Content Creator H is
self-employed and provides training videos on craft-
ing artificial intelligence-created image prompts.
These videos are housed on a digital platform acces-
sible through web browsers and a mobile app. H’s
longer and more complex training videos are locked
from public viewing, and users of the digital plat-
form can gain access to these training videos only
after paying a $5 contribution to H’s digital platform
account, the full amount of which is passed on by
the digital platform to H. Because the $5 contribu-
tion is required to access H’s content, this amount is
not a qualified tip but rather a payment for services
provided, which in this case is the training video.
Customer J pays the required $5 contribution and
watches the training video. Customer J is so satisfied
with the content of the training video that Customer J
sends an additional $2 contribution to H’s account as
a token of appreciation. Because J’s $2 contribution
was not required to access H’s content, the $2 contri-
bution is a qualified tip for purposes of the deduction
under section 224.
(xii) Example 12. Digital Content Creator K is
self-employed and live streams cooking videos on
a digital platform. K’s live streams are available for
free to all users of the digital platform. Viewers of
the live stream can send comments to K during the
live stream, which are displayed in a “chat” win-
dow during the live stream. In addition, viewers of
K’s live streams have the option to contribute a tip,
along with a comment of appreciation, to K’s digi-
tal platform account during a live stream. Viewers
that contribute a tip will have their contribution and
comment displayed prominently in the chat window.
In addition, K occasionally thanks contributors per-
sonally during the live stream. Because these con-
tributions are not required to access K’s content and
because the contributions are voluntarily provided,
these contributions are qualified tips for purposes of
the deduction under section 224. Superficial or nom-
inal digital tokens of appreciation from the tip recip-
ient that are negligible in value, such as highlighting
a contribution and comment in a chat window or
personally thanking the contributor, do not alter the
nature of the contribution as a qualified tip.
(xiii) Example 13. Manager M is a restaurant
manager at a restaurant. Customer N dines at the
restaurant and is dissatisfied with the quality of the
meal provided. Manager M listens to Customer N’s
complaint about the meal quality and provides res-
olution in the form of a discounted meal and a gift
card. Customer N is very satisfied with Manager M’s
handling of the situation and leaves a $5 tip specifi-
cally for Manager M. Because Manager M received
the tip while performing the duties of a restaurant
manager when providing service to Customer N,
and because restaurant manager is not an occupation
that is included in the table of Occupations that Cus-
tomarily and Regularly Received Tips on or Before
December 31, 2024, provided in paragraph (h) of this
section, the $5 tip paid by Customer N to Manager M
is not a qualified tip.
(xiv) Example 14. The facts are the same as in
paragraph (c)(12)(xiii) of this section (Example
13). Manager M occasionally performs duties as
wait staff for the restaurant when the restaurant is
crowded. Customer P dines at the restaurant and is
waited on by Manager M. When Customer P pays
the bill, Customer P pays Manager M a $5 tip. Tips
are not pooled at this restaurant. Because Customer
P’s tip was paid directly to Manager M while Man-
ager M was performing the duties of wait staff, and
because wait staff is an occupation that is included
in the table of Occupations that Customarily and
Regularly Received Tips on or Before December 31,
2024, provided in paragraph (h) of this section, the
$5 tip paid by Customer P to Manager M is a qual-
ified tip.
(d) Qualified tips must be reported on
an information return—(1) In general.
Except as provided in paragraph (d)(2) of
this section, in order to be eligible for the
deduction under section 224, qualified tips
must be included in the amount of cash
tips that are separately reported on a state-
ment furnished to the taxpayer pursuant to
section 6041(d)(3), section 6041A(e)(3),
section 6050W(f)(2), or section 6051(a)
(18), or reported by the taxpayer on Form
4137 (or successor).
(2) Transition rule for tax year 2025.
In order to be eligible for the deduction
under section 224 for taxable years begin-
ning before January 1, 2026, qualified tips
must be included in the aggregate amount
reported on a statement furnished to the

Bulletin No. 2026–18 869 April 27, 2026
taxpayer pursuant to section 6041(d)(3),
section 6041A(e)(3), section 6050W(f)
(2), or section 6051(a)(18), or reported by
the taxpayer on Form 4137 (or successor),
but cash tips do not need to be separately
reported on the statement.
(3) Statements furnished to certain
entities. Statements furnished to a sole
proprietorship or a single-member LLC
that does not elect to be treated as a cor-
poration for income tax purposes owned
by a tip recipient are considered to be
furnished to the tip recipient owner of
the sole proprietorship or single-member
LLC to which the statement was issued,
regardless of whether the name of the sole
proprietorship or single-member LLC
appears as the recipient on the statement.
(e) 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 (e)(1) of
this section.
(i) 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.
(ii) Example 2. Manicurist O is self-employed
and owns a nail salon. Manicurist O has no other
employment. For the taxable year, Manicurist O has
gross income of $75,000 that consists of $55,000 of
fees for services at the nail salon and $20,000 of qual-
ified tips. Manicurist O’s total deductible expenses
(other than the deduction for qualified tips) are
$60,000. Manicurists O’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
O received $20,000 in qualified tips, Manicurist O
is allowed a qualified tip deduction of only $15,000,
which is the extent to which Manicurist O’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.
(f) 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
qualified tips. The SSN, as defined in sec-
tion 24(h)(7) of the Code, must have been
issued before the due date of the income
tax return (including extensions) for the
calendar year in which the taxpayer is
claiming the deduction under section 224.
(2) Married taxpayers. Taxpayers who
are married, as defined by section 7703,
must file a joint return to claim the deduc-
tion allowed by section 224. However, to
claim the deduction allowed by section
224, married taxpayers are required to
include only the SSN of the taxpayer who
has received the tips to claim the deduc-
tion, and an SSN is required of both tax-
payers only when both have qualified tips
for which the deduction is being claimed.
(g) [Reserved]
(h) Occupations that customarily
and regularly received tips on or before
December 31, 2024. The occupations in
table 1 to this paragraph (h) customarily
and regularly received tips on or before
December 31, 2024. Individuals serving as
assistants or apprentices in an occupation
are included in that occupation category if
they perform the same services as those
listed in the occupation description. Sub-
ject to the requirements in section 224 and
this section, only qualified tips received in
connection with the occupations listed in
table 1 to this paragraph (h) are eligible
for the deduction in section 224(a).

April 27, 2026 870 Bulletin No. 2026–18
Table 1 to paragraph (h)
Occupations that Customarily and Regularly Received Tips on or Before December 31, 2024
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
Beverage and Food Service
101
BartendersMix and serve drinks or other
refreshments to patrons, directly or
through waitstaff.
Barkeep, mixologist,
taproom attendant,
sommelier
35-3011
102
Wait StaffTake orders and serve food and
beverages to patrons at tables in dining
establishments or at catered events.
Cocktail waitress, dining
car server, banquet staff
35-3031
103
Food or Beverage
Servers, Non-
restaurant
Serve food or beverages 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,
busser
35-9011
105
Chefs and CooksDirect 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
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
DishwashersClean 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
BakersMix 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

Bulletin No. 2026–18 871 April 27, 2026
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
Entertainment and Events
201
Gambling DealersOperate 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
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
teller
41-2012
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
cashier
43-3041
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

April 27, 2026 872 Bulletin No. 2026–18
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
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
usher
39-3031
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, doorman
39-6011
302
ConciergesAssist 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
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

Bulletin No. 2026–18 873 April 27, 2026
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
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 ElectriciansInstall, 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 PlumbersAssemble, 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
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
LocksmithsRepair 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

April 27, 2026 874 Bulletin No. 2026–18
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
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, at
a daytime nonresidential facility, or a
residential 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 and
invitations.
Wedding planner, party
planner
13-1121
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 OfficiantsLead 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
21-2011
506
Pet and Show
Animal Caretakers
Feed, water, groom, bathe, exercise, or
otherwise provide care to promote and
maintain the well-being of pets or show
animals.
Pet groomer, pet sitter, pet
walker, kennel worker, pet
trainer, horse groomer
39-2021
507
TutorsInstruct 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
509
Visual ArtistsCreate original visual artwork using any
of a wide variety of media and techniques.
Ice sculptor, caricature
sketch artist
27-1013

Bulletin No. 2026–18 875 April 27, 2026
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
510
Floral DesignersDesign, cut, and arrange live, dried, or
artificial flowers and foliage.
Corsage maker, florist,
flower arranger, event
florist
27-1023
Personal Appearance and Wellness
601
Skincare SpecialistsProvide skincare treatments to face
and body to enhance an individual's
appearance.
Facialist, electrologist, spa
esthetician
39-5094
602
Massage TherapistsPerform 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 and
Eyelash Technicians
Enhance and maintain clients' eyebrows
using techniques such as threading,
waxing, or tweezing. Enhance clients’
eyelashes using techniques such as tinting
or applying extensions.
Eyebrow waxer39-5012
607
Makeup ArtistsDesign and apply makeup looks.Wedding makeup artist,
party makeup artist
39-5091
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
39-9031
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
27-1019
610
TailorsDesign, make, alter, repair, or fit
garments.
Tailor, seamstress,
clothing alterations worker
51-6052
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 shiner51-6041

April 27, 2026 876 Bulletin No. 2026–18
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
Recreation and Instruction
701
Golf CaddiesAssist 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
53-2012
704
Tour GuidesGuide 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 GuidesPlan, organize, and conduct long-
distance travel, tours, and expeditions for
individuals and groups (covering both
indoor and outdoor locations).
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
25-3021
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
driver, platform/app-based
rideshare driver
53-3054
803
Shuttle DriversDrive 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. 2026–18 877 April 27, 2026
Treasury
Tipped
Occupation
Code
(TTOC)
TTOC Occupation
Title
TTOC Occupation DescriptionTTOC Illustrative
Examples
Related
Standard
Occupational
Classification
Code (Related
SOC Code)
1
804
Goods Delivery
People
Drive truck or other vehicle 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, app/platform-
based 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 MoversManually 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
810
Gas Pump AttendantPump gas for customers at a gas station.
May also clean the windshield, check the
oil level, or check the tire pressure of the
customer’s car in conjunction with the car
being refueled
Gas pumper53-6031
1. The “Related Standard Occupational Classification Code (Related SOC Code)” is the code 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).
(i) Termination. No deduction shall be
allowed under this section for any taxable
year beginning after December 31, 2028.
(j) Applicability date. This section
applies to taxable years beginning after
December 31, 2024.
Frank J. Bisignano,
Chief Executive Officer.
Approved: February 17, 2026
Kenneth J. Kies,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register April 10,
2026, 8:45 a.m., and published in the issue of the
Federal Register for April 13, 2026, 91 FR 19026)

April 27, 2026 878 Bulletin No. 2026–18
Part III
Administrative,
Miscellaneous, and
Procedural
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2026-26
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the inter-
est rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
1
However, an elec-
tion may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Section 1.430(h)(2)-1(d) provides
rules for determining the monthly cor-
porate bond yield curve, and § 1.430(h)
(2)-1(c) provides rules for determining the
24-month average corporate bond segment
rates used to compute the target normal
cost and the funding target. Consistent with
the methodology specified in § 1.430(h)
(2)-1(d), the monthly corporate bond yield
curve derived from March 2026 data is in
Table 2026-3 at the end of this notice. The
spot first, second, and third segment rates
for the month of March 2026 are, respec-
tively, 4.24, 5.35, and 6.25.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to
§ 430(h)(2)(C)(iv) to be within the appli-
cable minimum and maximum percent-
ages of the corresponding 25-year aver-
age segment rates. Those percentages are
95% and 105% for plan years beginning
in 2025 and 2026. For this purpose, any
25-year average segment rate that is less
than 5% is deemed to be 5%. The 25-year
average segment rates for plan years
beginning in 2025 and 2026 were pub-
lished in Notice 2024-67, 2024-41 I.R.B.
726 and Notice 2025-47, 2025-40 I.R.B.
441, respectively.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corpo-
rate bond segment rates applicable for
April 2026 without adjustment for the
25-year average segment rate limits are
as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
April 2026 4.46 5.27 5.84
The adjusted 24-month average seg-
ment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code. The
24-month averages applicable for April
2026, adjusted to be within the applicable
minimum and maximum percentages of
the corresponding 25-year average seg-
ment rates in accordance with § 430(h)(2)
(C)(iv), are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable MonthFirst SegmentSecond SegmentThird Segment
2025April 20264.755.275.84
2026April 20264.755.255.84
1
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).

Bulletin No. 2026–18 879 April 27, 2026
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the mini-
mum funding requirements that apply
to multiemployer plans pursuant to §
412. Section 431(c)(6)(B) specifies a
minimum amount for the full-funding
limitation described in § 431(c)(6)(A),
based on the plan’s current liability.
Section 431(c)(6)(E)(ii)(I) provides
that the interest rate used to calculate
current liability for this purpose must
be no more than 5 percent above and
no more than 10 percent below the
weighted average of the rates of interest
on 30-year Treasury securities during
the four-year period ending on the last
day before the beginning of the plan
year. Notice 88-73, 1988-2 C.B. 383,
provides guidelines for determining the
weighted average interest rate. The rate
of interest on 30-year Treasury securi-
ties for March 2026 is 4.85 percent. The
Service determined this rate as the aver-
age of the daily determinations of yield
on the 30-year Treasury bond maturing
in February 2056. For plan years begin-
ning in April 2026, the weighted aver-
age of the rates of interest on 30-year
Treasury securities and the permissible
range of rates used to calculate current
liability are as follows:
Treasury Weighted Average Rates
For Plan Years Beginning In30-Year Treasury Weighted AveragePermissible Range 90% to 105%
April 20264.474.02 to 4.69
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Section 1.417(e)-1(d)(3) pro-
vides guidelines for determining the min-
imum present value segment rates. Pursu-
ant to that section, the minimum present
value segment rates determined for March
2026 are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
March 2026 4.24 5.35 6.25
DRAFTING INFORMATION
The principal author of this notice
is Tom Morgan of the Office of Associ-
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free calls).

April 27, 2026 880 Bulletin No. 2026–18
Table 2026-3
Monthly Yield Curve for March 2026
Derived from March 2026 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.53.9820.55.9240.56.2960.56.4280.56.49
1.04.0621.05.9441.06.2961.06.4281.06.49
1.54.1321.55.9641.56.3061.56.4381.56.49
2.04.1922.05.9742.06.3062.06.4382.06.49
2.54.2322.55.9942.56.3162.56.4382.56.50
3.04.2823.06.0043.06.3163.06.4383.06.50
3.54.3223.56.0143.56.3263.56.4483.56.50
4.04.3624.06.0344.06.3264.06.4484.06.50
4.54.4124.56.0444.56.3264.56.4484.56.50
5.04.4725.06.0545.06.3365.06.4485.06.50
5.54.5325.56.0645.56.3365.56.4485.56.50
6.04.5926.06.0746.06.3466.06.4586.06.50
6.54.6626.56.0846.56.3466.56.4586.56.51
7.04.7327.06.0947.06.3467.06.4587.06.51
7.54.8027.56.1047.56.3567.56.4587.56.51
8.04.8728.06.1148.06.3568.06.4588.06.51
8.54.9428.56.1248.56.3568.56.4588.56.51
9.05.0129.06.1349.06.3669.06.4689.06.51
9.55.0729.56.1349.56.3669.56.4689.56.51
10.05.1430.06.1450.06.3770.06.4690.06.51
10.55.2030.56.1550.56.3770.56.4690.56.51
11.05.2531.06.1651.06.3771.06.4691.06.51
11.55.3131.56.1751.56.3771.56.4691.56.52
12.05.3632.06.1852.06.3872.06.4792.06.52
12.55.4132.56.1952.56.3872.56.4792.56.52
13.05.4633.06.1953.06.3873.06.4793.06.52
13.55.5033.56.2053.56.3973.56.4793.56.52
14.05.5534.06.2154.06.3974.06.4794.06.52
14.55.5934.56.2254.56.3974.56.4794.56.52
15.05.6235.06.2255.06.4075.06.4895.06.52
15.55.6635.56.2355.56.4075.56.4895.56.52
16.05.6936.06.2456.06.4076.06.4896.06.52
16.55.7236.56.2456.56.4076.56.4896.56.53
17.05.7537.06.2557.06.4177.06.4897.06.53
17.55.7837.56.2557.56.4177.56.4897.56.53
18.05.8138.06.2658.06.4178.06.4898.06.53
18.55.8338.56.2758.56.4178.56.4998.56.53
19.05.8639.06.2759.06.4279.06.4999.06.53
19.55.8839.56.2859.56.4279.56.4999.56.53
20.05.9040.06.2860.06.4280.06.49100.06.53

Bulletin No. 2026–18 881 April 27, 2026
Part IV
Announcement of
Disciplinary Sanctions from
the Office of Professional
Responsibility
Announcement 2026-9
The Office of Professional Respon-
sibility (OPR) announces recent disci-
plinary sanctions imposed on attorneys,
certified public accountants, enrolled
agents, enrolled actuaries, enrolled retire-
ment plan agents, and appraisers. The
OPR also announces when certain unen-
rolled, unlicensed tax return preparers
(individuals who are not enrolled to prac-
tice before the Internal Revenue Service
(IRS)) and are not licensed as attorneys
or certified public accountants) have been
disciplined. Licensed or enrolled prac-
titioners are subject to the regulations
governing practice before the IRS, which
are set out in Title 31, Code of Federal
Regulations (C.F.R.), Subtitle A, Part
10, and which are released as Treasury
Department Circular No. 230. The regula-
tions prescribe the duties and restrictions
relating to such practice and prescribe
the disciplinary sanctions for violating
the regulations. Unenrolled/unlicensed
return preparers who choose to partici-
pate in the IRS’s voluntary Annual Filing
Season Program (AFSP) are subject to
the guidance in Revenue Procedure 2014-
42, which governs a preparer’s eligibility
to represent taxpayers before the IRS in
examinations of tax returns the preparer
both prepared for the taxpayer and signed
as the preparer. Additionally, unenrolled/
unlicensed return preparers who partici-
pate in the AFSP agree to be subject to
the duties and restrictions in Circular 230,
including the restrictions on incompe-
tence or disreputable conduct.
The disciplinary sanctions imposed for
violation of the applicable standards are:
Disbarred from practice before the
IRS—An individual who is disbarred
is not eligible to practice before the IRS
as defined at 31 C.F.R. (Circular 230)
§ 10.2(a)(4) for a minimum period of five
(5) years and until reinstated to practice.
Suspended from practice before the
IRS—An individual who is suspended
is not eligible to practice before the IRS
as defined at 31 C.F.R. (Circular 230)
§ 10.2(a)(4) during the term of the suspen-
sion and until reinstated to practice.
Censured—Censure is a public repri-
mand. Unlike disbarment or suspension,
censure does not affect an individual’s eli-
gibility to practice before the IRS, but the
OPR may subject the individual’s future
practice rights to conditions designed to
promote high standards of conduct.
Payment of monetary penalty—A
monetary penalty may be imposed on an
individual who engages in conduct sub-
ject to sanction, or on an employer, firm,
or other entity if the individual was acting
on its behalf and it knew, or reasonably
should have known, of the individual’s
conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Additionally, any appraisal made by the
disqualified appraiser after the effective
date of disqualification will not have any
probative effect in any administrative pro-
ceeding before the Treasury Department
or the IRS.
Ineligible for limited practice—An
unenrolled/unlicensed tax return preparer
who participates in the AFSP and who fails
to comply with Circular 230 as required
by Revenue Procedure 2014-42 may have
their AFSP credential revoked and may be
determined ineligible to engage in future
limited practice under the program as a
representative of a taxpayer.
Under the regulations, individuals
subject to Circular 230 may not assist, or
accept assistance from, suspended or dis-
barred individuals with respect to matters
constituting practice (i.e., representation)
before the IRS, and they may not aid or
abet suspended or disbarred individuals to
practice before the IRS.
Disciplinary sanctions announced
below are described in these terms:
Disbarred by decision, Suspended by
decision, Censured by decision, Mone-
tary penalty imposed by decision, and
Disqualified by decision (including after
a hearing)—An administrative law judge
(ALJ), upon the OPR’s complaint alleg-
ing violation of the regulations, issued a
decision imposing one of these sanctions
after the ALJ either (1) granted the OPR’s
motion for summary adjudication or (2)
after conducting an evidentiary hearing.
After 30 days from the issuance of the
decision, in the absence of an appeal, the
ALJ’s decision becomes the final agency
decision.
Disbarred by default decision, Sus-
pended by default decision, Censured
by default decision, Monetary pen-
alty imposed by default decision, and
Disqualified by default decision—An
ALJ, after finding that no answer to the
OPR’s complaint was filed or timely filed,
granted the OPR’s motion for a default
judgment and issued a decision imposing
one of these sanctions.
Disbarred by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Mone-
tary penalty imposed by decision on
appeal, and Disqualified by decision
on appeal—The decision of the ALJ was
appealed to the agency’s appellate author-
ity, acting as the delegate of the Secretary
of the Treasury, and the appellate author-
ity issued a decision imposing one of these
sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted or
continued, an individual offered their con-
sent to one of these sanctions (or a firm or
other entity offered to consent to a mon-
etary penalty) and the OPR accepted the
offer and the parties entered into a consent
agreement. Typically, an offer of consent
will provide for: suspension for an indef-
inite term; conditions that the individual
must observe during the suspension; and
the individual’s opportunity, after a stated
number of months, to file with the OPR
a petition for reinstatement affirming
compliance with the terms of the consent
agreement and affirming current fitness
and eligibility to practice (i.e., an active
professional license or active enrollment

April 27, 2026 882 Bulletin No. 2026–18
status, with no intervening violations of
the regulations).
Suspended indefinitely by decision
in expedited proceeding, Suspended
indefinitely by default decision in expe-
dited proceeding—The OPR instituted
an expedited proceeding for suspension
(based on certain limited grounds, includ-
ing loss of a professional license for cause,
and criminal convictions) that resulted in
suspension.
Determined ineligible for limited
practice—There has been a final determi-
nation under Revenue Procedure 2014-42
that an unenrolled/unlicensed tax return
preparer is not eligible for continued lim-
ited representation of taxpayers because
the preparer violated standards of con-
duct prescribed in Circular 230 or failed
to comply with any of the requirements
described in the revenue procedure.
A practitioner who has been disbarred
or suspended under 31 C.F.R. Part 10’s
(Circular 230’s) § 10.60, (“Initiation of
proceeding” (before an ALJ)) or sus-
pended under § 10.82 (“Expedited sus-
pension”), or a disqualified appraiser may
petition for reinstatement before the IRS
after the expiration of 5 years following
such disbarment, suspension, or disqual-
ification (or immediately following the
expiration of the suspension or disqual-
ification period if shorter than 5 years).
Reinstatement will not be granted unless
the IRS is satisfied that the petitioner is
not likely to engage thereafter in conduct
contrary to Circular 230, and that granting
such reinstatement would not be contrary
to the public interest.
Reinstatement decisions are published
at the individual’s request, and described
in these terms:
Reinstated to practice before the
IRS—The OPR granted the individual’s
petition for reinstatement. The individual
is eligible to practice before the IRS, or in
the case of an appraiser, the individual is
no longer disqualified.
Reinstated to engage in limited prac-
tice before the IRS—The OPR granted
the individual’s petition for reinstatement.
The individual is eligible to engage in lim-
ited practice before the IRS as an unen-
rolled/unlicensed return preparer through
participation in the AFSP.
The OPR has authority to disclose
the grounds for disciplinary sanctions in
these situations: (1) an ALJ or the Sec-
retary’s delegate on appeal has issued a
final decision imposing a sanction; (2) the
individual has settled a disciplinary case
by signing the OPR’s consent-to-sanction
agreement admitting to one or more vio-
lations of the regulations and consenting
to the disclosure of the admitted violations
(for example, willful failure to file Federal
income tax returns, lack of due diligence,
conflict of interest, etc.); (3) the OPR has
issued a decision in an expedited proceed-
ing for indefinite suspension; or (4) upon
a final determination (including any deci-
sion on appeal) that an unenrolled/unli-
censed return preparer is no longer eligi-
ble to represent taxpayers before the IRS
as an AFSP participant under Revenue
Procedure .
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by state and second by the last
names of the sanctioned individuals (or
firms).
City & StateNameProfessional
Designation
Disciplinary SanctionEffective Date(s)
California
Agoura HillsFulton, William E.Enrolled AgentReinstated to practice
before the IRS, effective
February 11, 2026
New Jersey
EnglewoodKronegold, Joshua H.AttorneyReinstated to practice
before the IRS, effective
February 24, 2026
HawthorneMalqui, Ceasar B.Enrolled AgentSuspended by consent for
admitted violations of
31 C.F.R. § 10.51(a)(6)
Indefinite from
February 20, 2026
New York
Saratoga SpringsTaylor, Mae-Mae R.Enrolled AgentSuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
March 13, 2026
Missouri
SpringfieldMarple, Ray L.CPASuspended by default decision
in expedited proceeding under
31 C.F.R. § 10.82(b)
Indefinite from
February 12, 2026

Bulletin No. 2026–18 883 April 27, 2026
Notice of Proposed
Rulemaking
Excise Tax on Remittance
Transfers
REG-114499-25
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains
proposed regulations that would provide
rules and definitions related to the excise
tax imposed on certain remittance trans-
fers that occur after December 31, 2025.
The proposed regulations would affect
certain remittance transfer providers and
certain individuals sending remittance
transfers.
DATES: Electronic or written comments
and requests for a public hearing must be
received by June 12, 2026.
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-114499-25) by following
the online instructions for submitting com-
ments. Requests for a public hearing must
be submitted as prescribed in the “Com-
ments and Requests for a Public Hearing”
section. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn. The Department of
the Treasury (Treasury Department) and
the IRS will publish for public availabil-
ity any comment submitted to the IRS’s
public docket. Send paper submissions to:
CC:PA:01:PR (REG-114499-25), Room
5503, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Julia Barlow of the Office
of the Associate Chief Counsel (Energy,
Credits, and Excise Tax), (202) 317-6855
(not a toll-free number); concerning sub-
mission of comments or request for a pub-
lic hearing, Publications and Regulations
Section at (202) 317-6901 (not a toll-free
number) or by email at publichearings@
irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Authority
This notice of proposed rulemak-
ing contains proposed amendments that
would revise the Excise Tax Procedural
Regulations (26 CFR part 40) and add new
amendments to the Facilities and Services
Excise Tax Regulations (26 CFR part 49)
under section 4475 of the Internal Rev-
enue Code (Code), as enacted by Public
Law 119-21, 139 Stat. 72 (July 4, 2025),
commonly known as the One, Big, Beau-
tiful Bill Act (OBBBA). These proposed
amendments are issued under the author-
ity granted by section 4475(b) and (c) of
the Code, which authorize the Secretary
of the Treasury or the Secretary’s delegate
(Secretary) to provide the time and man-
ner of collection of the tax imposed by
section 4475(a) (remittance transfer tax)
and to determine the instruments that con-
stitute “similar physical instrument[s]” for
purposes of the tax.
Additionally, these proposed regu-
lations are issued pursuant to 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 regu-
lations as may be necessary by reason of
any alteration of law in relation to internal
revenue.”
Background
Section 4475 was added to chapter
36 of the Code by section 70604 of the
OBBBA. The remittance transfer tax
imposed by section 4475(a) is a 1 percent
tax on the amount of certain remittance
transfers that occur after December 31,
2025. Section 4475(b)(1) and (2) provide
that the remittance transfer tax is paid by
the sender, and that the remittance transfer
provider collects and remits the remittance
transfer tax quarterly to the Secretary at
the time and in the manner provided by
the Secretary. Section 4475(b)(3) provides
that, if the remittance transfer tax is not
collected at the time the remittance trans-
fer is made, the tax must be paid by the
remittance transfer provider.
Section 4475(c) provides that the
remittance transfer tax applies only to
remittance transfers for which the sender
provides cash, a money order, a cashier’s
check, or any other similar physical instru-
ment (as determined by the Secretary) to
the remittance transfer provider.
Section 4475(d) provides that the
remittance transfer tax does not apply
to any remittance transfer for which the
funds being transferred are (1) withdrawn
from an account held in or by a financial
institution described in subparagraphs (A)
through (H) of section 5312(a)(2) of title
31 of the U.S. Code (title 31), and subject
to the requirements under subchapter II of
chapter 53 of title 31, or (2) funded with
a debit card or a credit card issued in the
United States.
Section 4475(e) defines several terms
fundamental to the remittance transfer tax
by cross-reference to the Electronic Fund
Transfer Act (EFTA) (15 U.S.C. 1693–
1693r).
Section 4475(f) provides that, for pur-
poses of section 7701(l) of the Code, with
respect to any multiple-party arrange-
ments involving the sender, a remittance
transfer is treated as a financing transac-
tion.
Because section 4475 was added to
chapter 36 of the Code, and because quar-
terly remittances of the remittance trans-
fer tax are explicitly required by section
4475(b)(2), the remittance transfer tax
will be reported on Form 720, Quarterly
Federal Excise Tax Return, by the remit-
tance transfer provider as the collector.
See 26 CFR 40.0-1(a) and 40.6011(a)-1(a)
(1). Section 6302 of the Code authorizes
the Secretary to establish the mode and
time for collecting certain taxes, includ-
ing the taxes imposed by chapter 36.
Section 40.6302(c)-1(a)(1), which consti-
tutes an exercise of authority under sec-
tion 6302(a), requires each person that is
required to file Form 720 to make depos-
its of tax. Accordingly, collectors of the
remittance transfer tax are also required
to make semimonthly deposits of tax
pursuant to § 40.6302(c)-1(a)(1). Those
deposits are payments toward an amount
that is not fully determined until filing,

April 27, 2026 884 Bulletin No. 2026–18
and are distinguishable from the quar-
terly remittances of tax required by sec-
tion 4475(b)(2). Pursuant to § 40.0-1(c), a
semimonthly period is the first 15 days of
a calendar month or the portion of a cal-
endar month following the 15th day of the
month.
In Notice 2025-55, 2025-43 I.R.B. 625
(October 20, 2025), the Treasury Depart-
ment and the IRS provided relief from
failure to deposit penalties under section
6656 of the Code in connection with the
remittance transfer tax for the first three
calendar quarters of 2026. Notice 2025-
55 also provides that a remittance transfer
provider’s ability to use the deposit safe
harbor under § 40.6302(c)-1(b)(2) will
not be affected by a failure during the first
three calendar quarters of 2026 to make
deposits of the remittance transfer tax
as required under part 40, provided the
remittance transfer provider satisfies the
reasonable cause exception under section
6656(a).
Explanation of Provisions
I. Proposed Amendments to 26 CFR Part
40
Section 40.0-1(a) provides generally
that the regulations in part 40 set forth
administrative provisions relating to
the excise taxes imposed by chapters 31
through 34, 36, 38, 39, 49, and 50A of
the Code. Proposed § 40.0-1(a) would
amend that paragraph by referencing the
remittance transfer tax imposed by section
4475 as a tax imposed under chapter 36.
Proposed § 40.0-1(e) would amend the
applicability dates to reflect the proposed
change to § 40.0-1(a).
II. Proposed Amendments to 26 CFR Part
49
A. Definitions
Section 4475(e) defines several terms
by cross-reference to definitions in the
EFTA. Specifically, section 4475(e)
(1) provides that the terms “remittance
transfer,” “remittance transfer provider,”
and “sender” have the meanings pro-
vided in section 919(g) of the EFTA.
The cross-referenced definitions incor-
porate other terms defined in the EFTA:
specifically, “State,” “consumer,” and
“designated recipient.” Section 4475(e)
(2) defines the term “credit card” by ref-
erence to section 920(c)(3) of the EFTA,
which in turn references section 1602 of
title 15 of the U.S. Code. Section 4475(e)
(3) defines the term “debit card” by ref-
erence to section 920(c)(2) of the EFTA,
without regard to section 920(c)(2)(B)
of the EFTA (which provides that the
term “debit card” includes a general-use
prepaid card, as that term is defined in
section 915(a)(2)(A) of the EFTA). To
effectuate section 4475(e) and reduce
compliance burdens on remittance trans-
fer providers, the proposed regulations
would generally draw on the EFTA defi-
nitions of the terms cross-referenced in
4475(e) in a manner that is consistent
with the interpretation of such terms
in regulations issued by the Consumer
Financial Protection Bureau, see 12 CFR
part 1005 (Regulation E), to the extent
such interpretations are consistent with
the statutory provisions governing the
remittance transfer tax and principles of
sound tax administration.
Proposed § 49.4475-1(b)(1) would
define the term “cash” as United States
dollars or any foreign currency in physical
form that is issued by a government or a
central bank.
Proposed § 49.4475-1(b)(2) would
define the term “consumer” as a natu-
ral person, which is consistent with the
EFTA. See section 903(6) of the EFTA
and 12 CFR 1005.2(e). While the EFTA
definition of the term “consumer” is not
explicitly cross-referenced in section
4475(e), it is implicated by the cross-ref-
erenced definition of the term “sender” in
section 4475(e)(1).
Proposed § 49.4475-1(b)(3) would
define the term “designated recipient” as
any person specified by the sender as the
authorized recipient of a remittance trans-
fer to be received at a location in a for-
eign country. See section 919(g)(1) of the
EFTA; 12 CFR 1005.30(c). A remittance
transfer is received at a location in a for-
eign country if funds are to be received at
a location physically outside of any State.
See 12 CFR part 1005, supp. I (comment
to 30(c), “designated recipient”). This
proposed definition would ensure align-
ment with the EFTA and would clarify the
determination of the location of a recipi-
ent and, thus, the determination of the tax-
ability of the transaction.
Consistent with section 4475(e)(1),
proposed § 49.4475-1(b)(4)(i) would
define the term “remittance transfer” as
the electronic transfer of funds requested
by a sender to a designated recipient that
is sent by a remittance transfer provider.
The term applies regardless of whether the
sender holds an account with the remit-
tance transfer provider. See section 919(g)
(2)(A) of the EFTA; 12 CFR 1005.30(e).
Proposed § 49.4475-1(b)(4)(ii)(A)
and (B) would incorporate two exclu-
sions found in the EFTA and Regulation
E: one for small-value transactions, and
one for transfers that fund the purchase
of certain securities and commodities.
See section 919(g)(2)(B) of the EFTA;
12 CFR 1005.30(e)(2). These exclusions
would serve to align the scope of remit-
tance transfers subject to the EFTA with
those potentially subject to the remittance
transfer tax.
Proposed § 49.4475-1(b)(5)(i) would
define the term “remittance transfer pro-
vider,” consistent with section 4475(e)
(1), the EFTA, and Regulation E, as any
person that provides remittance transfers
for a consumer in the normal course of its
business, regardless of whether the con-
sumer holds an account with such person.
See section 919(g)(3) of the EFTA; 12
CFR 1005.30(f). A person is not a remit-
tance transfer provider merely because it
performs activities as an agent on behalf
of a remittance transfer provider. See 12
CFR part 1005, supp. I (comment to 30(f),
“remittance transfer provider”). For exam-
ple, a grocery store would not be a remit-
tance transfer provider merely because it
acts as an agent of a remittance transfer
provider to offer consumers remittance
transfer services.
The Treasury Department and the IRS
are aware that Regulation E provides a
safe harbor in 12 CFR 1005.30(f)(2) under
which a person is deemed not to be pro-
viding remittance transfers for a consumer
in the normal course of its business if the
person provided 500 or fewer remittance
transfers in the previous calendar year and
provided 500 or fewer remittance trans-
fers in the current calendar year. Proposed
§ 49.4475-1(c)(5)(ii) would depart from
Regulation E in this regard by providing
that this normal course of business safe

Bulletin No. 2026–18 885 April 27, 2026
harbor does not apply to section 4475(a).
This departure is necessary because other-
wise the rule would have the potential to
create inconsistent tax results for senders
in otherwise identical remittance transfer
transactions.
Consistent with section 4475(e)(1),
the EFTA, and Regulation E, proposed
§ 49.4475-1(b)(6) would define the term
“sender” as a consumer in a State who pri-
marily for personal, family, or household
purposes requests a remittance transfer
provider to send a remittance transfer to
a designated recipient. See section 919(g)
(4) of the EFTA; 12 CFR 1005.30(g).
The Treasury Department and the IRS
understand that many remittance trans-
fer providers may already structure their
businesses to distinguish consumer and
business services for purposes of com-
pliance with the EFTA and possibly other
applicable regulatory regimes. For consis-
tency and to minimize costs to remittance
transfer providers, a remittance transfer
provider’s classification of a remittance
transfer’s purpose (for personal, family,
household, or other purpose) should be the
same under the EFTA and the remittance
transfer tax.
Proposed § 49.4475-1(b)(7) would
define the term “State” as any State or
territory of the United States, or the Dis-
trict of Columbia. While the EFTA defi-
nition of the term “State” is not explicitly
cross-referenced in section 4475(e), it is
implicated by the cross-referenced defi-
nition of the term “remittance transfer”
in section 4475(e)(1). For this reason,
the proposed regulations would reflect
the EFTA definition of “State,” found in
section 903(11) of the EFTA, rather than
the definition provided in section 7701(a)
(10). Although otherwise identical to the
definition of the term “State” provided in
12 CFR 1005.2(l), proposed § 49.4475-
1(b)(7) would omit from that definition the
words “possession” and “Commonwealth
of Puerto Rico.” These terms would be
redundant in the context of Federal law
in which the term “possession” is synon-
ymous with “territory,”
1
and, pursuant to
section 7701(d), the Commonwealth of
Puerto Rico is a territory of the United
States. The proposed definition would
also omit the reference to “political sub-
division[s]” in Regulation E because that
concept is irrelevant to the remittance
transfer tax.
B. Imposition of the Tax
1. Attachment of the tax
Proposed § 49.4475-1(c)(1) would
provide that the remittance transfer tax
attaches at the time a remittance transfer
is made, see section 4475(b)(3), clarifying
that this occurs at the earlier of the time
the remittance transfer is initiated by the
remittance transfer provider or the time
the sender pays the remittance transfer
provider (or its agent). The proposed rule
would include an example illustrating that
the fact that funds may not be disbursed
to the designated recipient until a later
date does not affect the time a remittance
transfer is made for purposes of determin-
ing the calendar quarter in which the tax
attaches and the transfer is reportable.
Consistent with this proposed rule,
proposed § 49.4475-1(c)(2) would clarify
that the remittance transfer tax attaches to
remittance transfers regardless of whether
the transferred amount is disbursed to
the designated recipient. The proposed
rule would also clarify that, in cases in
which a remittance transfer is canceled or
expires and the remittance transfer pro-
vider refunds the amount of the remittance
transfer to the sender, the sender may file a
claim for refund of the remittance transfer
tax with the IRS. Neither section 4475 nor
any other section of the Code entitles the
collector (unlike the sender) to refunds of
the remittance transfer tax.
2. Taxable remittance transfers
Section 4475(c) and (d) provide the
scope of the remittance transfers to which
the remittance transfer tax applies. Sec-
tion 4475(c) provides that the remittance
transfer tax applies only to remittance
transfers for which the sender provides
cash, a money order, a cashier’s check,
or any other similar physical instrument
(as determined by the Secretary) to the
remittance transfer provider. Pursuant
to the grant of authority provided in sec-
tion 4475(c), proposed § 49.4475-1(d)
(1) would add traveler’s checks to the
list of taxable instruments. As a method
of payment, traveler’s checks are virtu-
ally indistinguishable from money orders
and cashier’s checks and are, therefore, a
“similar physical instrument.”
Section 4475(d) provides that the remit-
tance transfer tax does not apply to any
remittance transfer for which the funds
being transferred are (1) withdrawn from
an account held in or by a financial insti-
tution described in section 5312(a)(2)(A)
through (H) of title 31 and subject to the
requirements under chapter 53, subchap-
ter II of title 31, or (2) funded with a debit
card or credit card issued in the United
States. Proposed § 49.4475-1(d)(1) would
provide that settlement of a payment obli-
gation under a money order, cashier’s
check, or traveler’s check by the issu-
ing entity to the remittance transfer pro-
vider does not constitute a “withdrawal”
for purposes of section 4475(d)(1). Such
funds satisfy the issuing entity’s payment
obligation under the instrument, rather
than being withdrawn from an account
of the sender with a financial institution
described above. Proposed § 49.4475-1(d)
(1) would not separately address the appli-
cability of section 4475(d)(1) to personal
or business checks made out to a remit-
tance transfer provider or general-use pre-
paid cards, because a sender’s provision
of such instruments would not trigger the
remittance transfer tax under proposed
§ 49.4475-1(d)(1) in the first instance.
Similarly, proposed § 49.4475-1(d)
(1) would not separately address section
4475(d)(2), which renders remittance
transfers funded with a debit card or a
credit card issued in the United States
nontaxable, because a sender’s use of
such a card to pay for a remittance transfer
would not trigger the tax under proposed §
49.4475-1(d)(1) in the first instance. As a
result, any remittance transfer funded with
a debit card or credit card would be non-
taxable, regardless of the country in which
such debit card or credit card was issued.
Proposed § 49.4475-1(d)(2) would pro-
vide that in a case in which a remittance
transfer provider (or its agent) cashes a
1
U.S. Department of the Interior, Definitions of Insular Area Political Organizations, at https://www.doi.gov/oia/islands/politicatypes#.

April 27, 2026 886 Bulletin No. 2026–18
personal or business check payable to the
sender and the funds are used to fund a
remittance transfer, such transaction will
be treated for purposes of proposed §
49.4475-1(d)(1) as a remittance transfer
for which the sender provides cash to the
remittance transfer provider. The pro-
posed regulations would treat this scenario
as involving two separate transactions: a
check-cashing transaction followed by a
remittance transfer for which the sender
provided cash to the remittance transfer
provider under proposed § 49.4475-1(d)
(1), regardless of the steps involved and
regardless of whether the sender ever
has actual possession of any resulting
cash. Any remittance transfer funded as
described in proposed § 49.4475-1(d)(2)
would, therefore, be subject to taxation
under section 4475(a) as a remittance
transfer for which the sender provided
cash to a remittance transfer provider.
Proposed § 49.4475-1(d)(3) would
define the amount subject to the remit-
tance transfer tax, with respect to any
taxable remittance transfer, as the amount
that will ultimately be transferred to the
designated recipient; amounts that will
not be transferred to the designated recip-
ient are not included. Thus, promotional
“bonuses” that are included in the amount
ultimately transferred to the designated
recipient but not directly paid for by the
sender would be part of the remittance
transfer amount under the proposed rule.
Service fees, State taxes, and charges
for other goods and services that are not
ultimately transferred to the designated
recipient would not be part of the remit-
tance transfer amount under the proposed
rule. The remittance transfer provider’s
characterization of an amount would not
be determinative under the proposed rule
if, in fact, such amount will ultimately
be transferred to the designated recipi-
ent. This proposed rule is consistent with
the ordinary meaning of the term “remit-
tance transfer,” the reference, in section
4475(d), to “the funds being transferred,”
and the EFTA disclosure requirements
under 12 CFR 1005.31(b)(1)(i).
Proposed § 49.4475-1(d)(4) would
provide that transactions engaged in for
a principal purpose of avoiding the remit-
tance transfer tax may be disregarded or
recharacterized to reflect the substance of
those transactions. The determination of
whether a sender and remittance transfer
provider or third party have engaged in a
transaction or series of transactions with
a principal purpose of avoiding the tax
would be based on all facts and circum-
stances, including facts and circumstances
relevant to a remittance transfer provid-
er’s or third party’s pattern of conduct.
The proposed rule would also provide two
examples of the application of this rule
in which a remittance transfer provider
or their agent issues general-use prepaid
cards to customers paying with cash for
purposes of avoiding the remittance trans-
fer tax.
Proposed § 49.4475-1(e) would pro-
vide examples illustrating the application
of these proposed definitions and rules.
Proposed Applicability Date
These regulations are proposed to
apply to remittance transfers made in cal-
endar quarters beginning on or after the
date these regulations are published as
final regulations in the Federal Regis-
ter. Collectors and taxpayers may rely on
these proposed regulations for remittance
transfers made after December 31, 2025,
and before the first calendar quarter begin-
ning on or after the date these regulations
are published as final regulations in the
Federal Register, provided that collec-
tors and taxpayers follow these proposed
regulations in their entirety and in a con-
sistent 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 Office of Management
and Budget’s (OMB’s) Office of Infor-
mation and Regulatory Affairs (OIRA) as
subject to review under Executive Order
12866 pursuant to the Memorandum of
Agreement (MOA, July 4, 2025) between
the Treasury Department and the Office of
Management and Budget regarding review
of tax regulations. OIRA has determined
that the proposed rulemaking is significant
and subject to review under section 3(f) of
Executive Order 12866 and section 1(c) of
the Memorandum of Agreement. Accord-
ingly, the proposed regulations have been
reviewed by OMB. This rule is expected
to be an Executive Order 14192 regula-
tory action.
A. Need for Regulation
Section 70604 of Public Law 119-21,
139 Stat. 72 (July 4, 2025), commonly
known as the One, Big, Beautiful Bill Act
(OBBBA), added a new section 4475 to
the Internal Revenue Code (Code). Sec-
tion 4475 imposes an excise tax equal to
one percent of the amount of any taxable
remittance transfer. The proposed regula-
tions are needed to clarify the scope and
application of the tax. Following statutory
requirements, the proposed regulations
clarify that the tax would be triggered
only when the sender funds the transfer
with specified funding instruments. The
proposed regulations also provide that the
tax base would be the amount transferred
to the designated recipient (rather than,
say, the amount spent by the sender), and
that the tax would attach at the time when
a remittance transfer is made.
B. The Statute and the Proposed
Regulations
Section 4475 of the Code imposes an
excise tax equal to 1 percent of the amount
of any taxable remittance transfer initi-
ated by a domestic sender and received
by a designated recipient located outside
of the United States. Existing excise tax
procedural regulations (ETPR) apply to
the new remittance transfer tax by virtue
of section 4475 being placed in chapter 36
of the Code. The ETPR provide admin-
istrative rules for remittance transfer
providers regarding collection of the tax
from senders, reporting requirements, and
the payment of tax deposits to the Inter-
nal Revenue Service (IRS). The ETPR

Bulletin No. 2026–18 887 April 27, 2026
are operative even in the absence of the
proposed regulations. The proposed regu-
lations clarify that the ETPR apply to the
remittance transfer tax but do not make
any substantive procedural amendments
regarding the remittance transfer tax.
Section 4475(c) specifies that the tax
applies only to a remittance transfer that
the sender funds using cash, a money
order, a cashier’s check, or other similar
physical instrument (as provided by the
Secretary). Section 4475(d) further spec-
ifies that the tax does not apply to funds
being transferred that are withdrawn from
an account held in or by certain financial
institutions or that are funded using a debit
card or a credit card issued in the United
States. Using the subsection (c) authority,
the proposed regulations add traveler’s
checks to the list of physical instruments
that would give rise to a tax liability.
2
Sub-
ject to an anti-avoidance rule in the pro-
posed regulations, a sender’s provision
of other instruments, such as personal or
business checks, credit and debit cards
(regardless of country of issuance), and
general-use prepaid cards, would not trig-
ger the remittance transfer tax. Although
checks are not included on the list of tax-
able funding instruments, the proposed
regulations clarify that if a remittance
transfer provider or its agent cashes a
check payable to the sender and some, or
all, of the cash is used to fund a remittance
transfer, then the remittance transfer is
treated as being funded with cash. In this
case, it does not matter whether the sender
is charged a separate check-cashing fee.
The proposed regulations specify that
the remittance transfer tax attaches at the
time when a remittance transfer is made,
which occurs at the earlier of the time
the remittance transfer is initiated by the
remittance transfer provider or the time
the sender pays the remittance transfer
provider or its agent. If the transfer is
canceled or expires, and the amount of
the transfer is returned to the sender, the
sender may be eligible to file a claim for
refund with the IRS.
3

Section 4475(e) provides definitions of
“remittance transfer,” “remittance trans-
fer provider,” “sender,” “credit card,” and
“debit card” by cross-referencing to the
Electronic Fund Transfer Act (EFTA).
4

The EFTA definitions have been fur-
ther refined in regulations issued by the
Consumer Financial Protection Bureau
(CFPB), which are identified as “Regu-
lation E.”
5
The proposed regulations gen-
erally adopt the Regulation E definitions,
which are familiar to remittance transfer
providers, but modify those rules when
necessary, in view of the different purpose
of implementing the remittance transfer
tax.
The proposed regulations adopt the
definition of “remittance transfer” from
Regulation E. This definition refers to an
“electronic transfer of funds requested by
a sender to a designated recipient that is
sent by a remittance transfer provider.”
It does not specify the taxable amount of
a remittance transfer. Therefore, the pro-
posed regulations provide that the remit-
tance transfer tax would be imposed on
the total amount that will be transferred
to the designated recipient, including any
amount provided by the sender, the remit-
tance transfer provider, or any other per-
son (including promotional bonuses or
discounts). This tax base excludes fees
paid to the remittance transfer provider,
any State taxes imposed on the transfer,
charges for other goods or services that
are not transferred, and the remittance
transfer tax itself. The statutory and Reg-
ulation E definitions of remittance trans-
fers exclude “small-value transactions.”
6

These transfers are currently determined
under Regulation E as those valued at $15
or less. The proposed regulations adopt an
additional exclusion specified under Reg-
ulation E for any transfer whose primary
purpose is the purchase or sale through a
regulated broker-dealer or futures com-
mission merchant of certain regulated
securities or commodities. Adoption of
these exclusions by the proposed regula-
tions is intended to align the scope of a
remittance transfer under the remittance
transfer tax with that of a remittance trans-
fer under EFTA.
The proposed regulations refer to and
generally adopt the Regulation E defini-
tions of “sender,” “designated recipient,”
and “remittance transfer provider.” Con-
sistent with Regulation E, an entity act-
ing as an agent on behalf of remittance
transfer providers would not itself be con-
sidered a remittance transfer provider.
7

However, the proposed regulations do not
adopt a Regulation E safe harbor under
which a person is deemed not to be pro-
viding remittance transfers for a consumer
in the normal course of its business if the
person provided 500 or fewer remittance
transfers in the previous and current cal-
endar years.
8
C. 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 tax-related behavior in the absence of
these proposed regulations.
D. Affected Entities and Taxpayers
By providing additional specificity to
needed definitions and to required rules
governing the scope, timing and amount
of tax, the proposed regulations affect
senders of remittances, remittance transfer
providers, and agents of remittance trans-
fer providers.
Banks, credit unions, and money ser-
vices businesses (MSBs) make up the
universe of remittance transfer provid-
ers. Since remittance transfers facili-
tated by financial institutions are primar-
ily funded by non-cash instruments, the
2
The proposed regulations clarify that the settlement of a money order, cashier’s check, or traveler’s check does not constitute a withdrawal from an account at a financial institution for
purposes of section 4475(d)(1). Thus, the source of any funds used to purchase such instruments is immaterial.
3
Section 6402 of the Code provides authority for the Secretary to credit the amount of any tax overpayment in respect of an Internal Revenue tax and, subject to certain rules, may refund any
balance due, including any allowed interest, to the person who made an overpayment.
4
The EFTA is codified as 15 U.S.C. 1693-1693r.
5
Regulation E (Electronic Fund Transfers) is found at 12 CFR Part 1005.
6
See 15 U.S.C. 1693o-1(g)(2)(B) and 12 CFR 1005.30(e)(2)(i).
7
See the official interpretation of the section 1005.2 definition of remittance transfer provider at 12 CFR supplement I 30(f)(1).
8
See 12 CFR 1005.30(f)(2)(i).

April 27, 2026 888 Bulletin No. 2026–18
Treasury Department and the IRS expect
that banks and credit unions will not be
materially affected by the remittance
tax and proposed regulations. Accord-
ing to annual data from NMLS Money
Services Businesses Report, there
are approximately 600 MSBs that are
licensed as money transmitters.
9
Among
them, more than 200 MSBs, through
approximately 500,000 authorized
agents, provide remittance transfers at
retail locations and likely accept cash
and cash-like payment instruments. The
remaining 400 MSBs do not work with
agents and likely provide remittance
transfers solely through online plat-
forms and accept non-physical payment
instruments. In addition, the Treasury
Department and the IRS estimate that
approximately 3.6 million households
per year have sent remittance transfers
through nonbank money transfer ser-
vices in recent years, among which 30
percent to 36 percent, or 1.1 million to
1.3 million households, likely used cash
or cash-like instruments.
10
E. Economic Effects of the Proposed
Regulations
The Treasury Department and the IRS
analyzed the economic effects of the pro-
posed regulations in adopting Regulation
E definitions with some modifications,
clarifying that the tax base of the remit-
tance tax excludes service fees imposed
by remittance transfer providers and
includes promotional values being trans-
ferred, adding traveler’s checks as a cash-
like instrument, and clarifying the treat-
ment of remittance transfers paid for with
funds from checks cashed by a remittance
transfer provider or its agent.
The proposed regulations provide clar-
ity and certainty to the implementation
of the statute and promote a consistent
application of the tax, while minimizing
the associated compliance burdens for
remittance transfer providers and agents.
The Treasury Department and the IRS do
not have readily available parameters and
models to quantify the impact the pro-
posed regulations may have on the type of
funding instruments used to pay for remit-
tance transfers or on the level of remit-
tance transfers. The following sections
describe in further detail the potential eco-
nomic impacts of specific elements of the
proposed regulations.
1. Economic Background of Remittance
Transfers
Annual data from NMLS Money Ser-
vices Businesses Report shows that the
total money transmissions to domestic and
foreign destinations via MSBs grew from
$1.3 trillion in 2019 to $4 trillion in 2024.
Money transmitted to foreign destinations
(remittance transfers) accounted for 9 to 25
percent of the total money transmissions,
equaling $236 billion in 2019, growing to
almost $1 trillion in 2021 and 2022, but
decreasing to $365 billion in 2024. Over
2019–2024, annual remittance transfers to
foreign destinations through MSBs aver-
aged $520 billion.
11
The average individ-
ual money transfer size ranged from $290
to $740 over the same time period.
Table 1: Money Transfers via MSBs
Total money transfer,
domestic and foreign
(Millions of USD)
Total remittance transfer
(foreign only)
(Millions of USD)
Average transfer,
domestic and foreign
(USD)
20191,310,111235,820290
20201,821,770273,265303
20213,768,884942,221740
20223,715,101965,926566
20233,770,451339,341370
20244,058,716365,284365
Average3,074,172520,310439
Remittance transfers are subject to
transaction fees charged by the remittance
transfer providers, which can vary by pro-
vider, the size of the transfer, payment
modes, the corridor of transaction, speed
of delivery, as well as other factors. For
$200 and $500 remittance transfers sent
from the United States in 2025, the World
Bank estimates an average transaction fee
of 5.56 percent and 3.81 percent, respec-
tively.
12
For taxable remittance transfers
within that range of amounts, a 1 percent
9
The Nationwide Multistate Licensing System (NMLS) regulates and collects data on MSBs, some of which provide remittance transfer services, i.e., money transmitters. The NMLS annual
MSB reports are available at https://mortgage.nationwidelicensingsystem.org/knowledge/Products/nmls/aboutNMLS/SitePages/NMLSReports.aspx.
10
The 2020 Census enumerated 331.4 million people and 126.9 million households in the U.S. (see https://www2.census.gov/library/publications/decennial/2020/census-briefs/c2020br-10.
pdf). The FDIC National Survey of Unbanked and Underbanked Households in 2021 and 2023 finds that 2.8 percent of all surveyed households sent or received international remittances
through nonbank money transfer services (see 2021 FDIC National Survey of Unbanked and Underbanked Households, at https://www.fdic.gov/analysis/household-survey/2021report.
pdf, and 2023 FDIC National Survey of Unbanked and Underbanked Households, at https://www.fdic.gov/household-survey/2023-fdic-national-survey-unbanked-and-underbanked-house-
holds-report). Based on these statistics, the Treasury Department and the IRS estimate that approximately 3.6 million households will send remittances through MSBs annually. Also see
subsequent analysis in “Economic Background of Remittance Transfers” for how the Treasury Department and the IRS derived that 30 percent of remittance transfers are paid for by cash.
11
Money transfers to foreign destinations were highly volatile during this time period. The 2021 and 2022 annual totals are about three times as large as those in other years, likely due to a
variety of factors, such as strong economic recovery post-COVID in the United States, sluggish economic recovery overseas (higher demand for remittances at the destination), and fluctua-
tions in immigration flows. Excluding 2021 and 2022, the annual remittance transfers to foreign destinations averaged $303 billion.
12
This estimate is based on Remittance Prices Worldwide database analysis available in Remittance Prices Worldwide Quarterly, at https://remittanceprices.worldbank.org/sites/default/files/
rpw_main_report_and_annex_q125_1_0.pdf.

Bulletin No. 2026–18 889 April 27, 2026
tax rate amounts to an average 18 to 26
percent increase in the total remittance
cost (exclusive of the amount remitted)
that senders will face.
MSBs offer money transfers via two
main channels: at retail locations and
through digital platforms. Based on indus-
try reporting and consumer surveys, the
Treasury Department and the IRS estimate
that the share of remittances transferred
through digital platforms is likely 40 to
50 percent. Remittance transfers through
digital platforms are funded by non-cash
instruments such as debit cards and ACH
transfers. Among remittance transfers
conducted through retail locations (the
remaining 50 to 60 percent), customers
can fund the transfers using cash, credit
and debit cards, and other payment meth-
ods accepted by the MSB.
There is limited public information
on the share of various payment methods
used by senders for remittance transfers.
The Treasury Department and the IRS
therefore estimate the share of cash trans-
fers based on three factors that are relevant
for choosing cash payment at retail remit-
tance transfer providers—the identity of
the senders, the share of the unbanked
population among senders, and broadband
and smart phone penetration rates. The
Treasury Department and the IRS expect
that the population using MSB retail loca-
tions to make remittance transfers consists
of unbanked senders, plus banked senders
who lack internet or smartphone access.
A U.S. Census Bureau working paper
estimates that the vast majority of remit-
tance transfers are sent by immigrants,
i.e., foreign-born persons living in the
United States.
13
In addition, 7 percent of
immigrants live in an unbanked house-
hold, according to a recent study.
14
The
Treasury Department and the IRS there-
fore estimate that about 7 percent of immi-
grants would send remittance transfers
using cash because they have no access
to alternative payment methods, such as
debit cards, through accounts with finan-
cial institutions.
Senders without access to smartphones
or internet, even if banked, do not have
access to digital payment platforms, and
these senders are assumed to make up the
rest of the customers who use MSB retail
locations. A 2023 Pew Research Center
survey finds that 95 percent of adults liv-
ing in the United States have access to
the internet and 90 percent have a smart-
phone.
15
The Treasury Department and the
IRS therefore estimate that approximately
4.65 percent of the total immigrant pop-
ulation live in banked households but do
not have internet access or smartphones (5
percent without internet access or smart-
phones × 93 percent in banked house-
holds). This population may find money
transfers through a bank uneconomical,
but do not have access to less costly, digital
remittance transfer platforms. Therefore,
they would likely send remittances through
an MSB retail location using non-physical
payments, such as a debit card.
Among the two groups who are
assumed to visit MSB retail locations—
unbanked immigrants and banked ones
without internet or smartphone access—
only the first group would likely use cash
or similar instruments to pay for remittance
transfers. Based on the relative share of
these two groups, the Treasury Department
and the IRS estimate that 60 percent of
retail money transfers are funded by cash
and cash-like instruments.
16
Therefore, the
Treasury Department and the IRS estimate
that 30 to 36 percent of remittance trans-
fers by MSBs are funded by cash.
17
Apply-
ing these shares to the average 2019–2024
annual remittance transfer volume of $520
billion results in annual cash remittance
transfers totaling about $156 billion to
$187 billion. These estimates are based on
data from years before the remittance trans-
fer tax went into effect.
2. Defining Terms by Cross-referencing
and Modifying Regulation E Definitions
The proposed regulations generally
adopt definitions employed in Regula-
tion E that were initially promulgated for
purposes of providing consumer protec-
tions while using electronic fund trans-
fers. Because affected remittance trans-
fer providers are already familiar with
these terms from complying with EFTA,
the proposed regulations minimize com-
pliance burdens by not introducing new
terms to affected providers.
Under the proposed regulations, an
entity acting as an agent on behalf of
remittance transfer providers would not
itself be considered a remittance transfer
provider. The decision to adopt this rule in
the proposed regulations eases the poten-
tial compliance burden for the approx-
imately 500,000 agents that work with
MSBs. While these agents must adapt
their current practices to collect the tax
on remittance services, the MSBs must
develop systems and internal controls in
order to comply with the procedural rules
of the ETPR as they relate to the tax on
remittance transfers. Thus, under the pro-
posed regulations, the compliance burden
of the ETPR, such as familiarization with
laws and regulations, recordkeeping, and
reporting costs, falls primarily on MSBs
rather than agents. Given their familiar-
ity with EFTA and Regulation E, MSBs
are better equipped to shoulder the ETPR
compliance burden than their agents.
MSBs can also leverage their size to
absorb the fixed costs of complying with
the ETPR on behalf of their network of
agents. In the aggregate, this is less costly
than an alternative where each agent
would have to incur the full fixed costs of
ETPR compliance.
The definition of “remittance trans-
fer provider” in the proposed regulations
departs from Regulation E by not adopt-
ing a safe harbor under which a person
is deemed not to be providing remittance
transfers for a consumer in the normal
course of its business if the person pro-
vided 500 or fewer remittance transfers in
the previous and current calendar years. If
the proposed regulations were not issued,
entities that currently qualify for the Reg-
13
A 2010 Census study using the 2008 CPS Migration Supplement estimates that foreign-born households comprised 84 percent of the households that sent remittance transfers and accounted
for 90 percent of the total amount of remittance transfers. The study is available at https://www.census.gov/content/dam/Census/library/working-papers/2010/demo/POP-twps0087.pdf.
14
“A Profile of Low-Income Immigrants in the United States” (2022), at https://www.migrationpolicy.org/sites/default/files/publications/mpi_low-income-immigrants-factsheet_final.pdf.
15
See full report at https://www.pewresearch.org/wp-content/uploads/sites/20/2024/01/PI_2024.01.31_Home-Broadband-Mobile-Use_FINAL.pdf.
16
The estimated share of retail payments funded by cash is (0.07 / (0.07 + 0.0465)) = 60 percent.
17
If retail transfers make up 50 to 60 percent of all transfers, and 60 percent of retail transfers are deemed to be funded by cash, then 30 percent (0.5 × 0.6) to 36 percent (0.6 × 0.6) of total
remittance transfers are estimated to be funded with cash.

April 27, 2026 890 Bulletin No. 2026–18
ulation E safe harbor would face uncer-
tainty whether they would need to collect
and remit the remittance transfer tax. The
proposed regulations provide certainty to
entities potentially affected by the Regu-
lation E safe harbor, though the affected
entities may face an increase in compli-
ance cost relative to the case where the
Regulation E safe harbor was adopted in
the proposed regulations.
The Treasury Department and the IRS
estimate that not adopting the safe har-
bor provided under Regulation E would
affect a limited number of remittance
transfer providers and a small share of
remittance transfers. In 2020, the CFPB
was not aware of any MSB remittance
transmitter providers with less than 500
annual transfers. Therefore, the Treasury
Department and the IRS expect that very
few, if any, MSBs currently qualify for the
safe harbor. According to the same CFPB
analysis, banks and credit unions are more
likely to qualify for the safe harbor, but
remittance transfers facilitated by these
financial institutions are unlikely to be
funded with cash and hence would not be
taxable with or without the safe harbor.
18

The safe harbor was not adopted in the
proposed regulations because it is incon-
sistent with the operation of an efficient
and effective excise tax. The safe harbor
is not based on a characteristic of the
remittance transfer or of the sender but
on the transaction volume of the entity.
Consequently, under such a safe harbor
rule, identical remittance transfer trans-
actions could be either taxable or nontax-
able, depending on the vendor used. Some
vendors could possibly reorganize their
legal structures to avoid being subject to
the remittance tax, and such restructuring
would be an inefficient use of resources.
In addition, with the safe harbor, entities
would need to accurately predict their
annual remittance transfer volume to avoid
the increased tax reporting and collection
costs associated with being a “remittance
transfer provider.” Overall, the Treasury
Department and the IRS expect the ben-
efits of a consistent application of the
remittance tax and lower economic distor-
tions in the provision of remittance trans-
fers from not adopting the safe harbor to
outweigh the increased compliance costs
for the relatively small number of affected
low-volume entities.
3. Specifying the Tax Base of the
Remittance Tax
The proposed regulations clarify that
the amount subject to the remittance tax
is the amount “transferred to the desig-
nated recipient.” Specifically, the tax base
excludes identified fees and taxes paid by
the sender to the remittance transfer pro-
vider but not transferred to the designated
recipient. However, the tax base includes
any promotional bonuses transferred to
the recipient, but which are not paid by
the sender.
The Treasury Department and the IRS
considered an alternative tax base that
would include amounts paid by the sender
but not transferred to the designated recip-
ient but decided against this option. These
amounts include transfer fees, State taxes,
and other charges imposed or collected by
the remittance transfer provider. They can
vary by provider, location of the sender,
destination of the recipient, payment
method, speed of delivery, and the amount
of transfer. Under this alternative tax
base, the costs and profit of the remittance
transfer provider that are associated with
providing the remittance transfer service
would be taxed in addition to the transfer
amount. Remittances of the same amount
would give rise to varying amounts of tax.
Including transfer fees and taxes in the
base of the remittance transfer tax would
increase the cost of a taxable remittance
transfer to the sender. For example, if the
fees to send a $100 transfer were $10,
then including fees in the tax base would
increase the tax due on this transaction
from $1.00 to $1.10. The after-tax price
of the transaction would increase from
$11.00 to $11.10, an increase of 0.9 per-
cent. This small increase in price would
discourage taxable remittance transfers
by a small amount, with the magnitude
dependent on the elasticity of demand for
remittance transfers.
1

If provider fees and taxes were
included in the remittance transfer tax
base, then the tax can be analytically
thought of as two separate taxes. The first,
an excise tax on remittances and second,
a targeted sales tax on the fees (inclusive
of other taxes) charged by remittance
transfer providers. While the primary
distortion of the combined tax would be
upon the after-tax price of remittances,
the sales tax component of the larger tax
base would introduce other distortions on
remittance transfer providers. The sales
tax component may affect providers and
their senders differentially depending on
factors such as cost structure, specializa-
tion, and location. The broader base may
also encourage tax avoidance behavior
by providers, such as bundling the price
of services and charging a higher price for
the untaxed service and a lower price for
the taxed remittance transfer compared
to when the services are purchased sepa-
rately. These effects are not expected to be
large, given that the tax rate is only one
percent, but indicate that the economic
distortions from the remittance tax would
increase if the base included provider
fees and other taxes. Thus, the decision
to apply the remittance transfer tax to
only the amount transferred would result
in lower economic distortions relative to
a more expansive base that included pro-
vider fees and taxes.
4. Enumeration of Similar Physical
Instruments that Trigger the Remittance
Tax
Section 4475(c) authorizes the Secre-
tary to identify physical, cash-like instru-
ments that would be treated as triggering
the remittance tax. The proposed regula-
tions add traveler’s checks to the list of
funding instruments that would give rise
to taxable remittances. Traveler’s checks
are virtually indistinguishable from money
orders and cashier’s checks and are, there-
fore, a “similar physical instrument.”
18
See CFPB’s analysis at https://www.federalregister.gov/documents/2020/06/05/2020-10278/remittance-transfers-under-the-electronic-fund-transfer-act-regulation-e#footnote-84-p34896.
19
Recent literature suggests that the price elasticity of remittance transaction costs is around 0.09 (see Kpodar and Imam (2024), How do transaction costs influence remittances? World
Development, vol. 177, May 2024, 106537, at https://doi.org/10.1016/j.worlddev.2024.106537).

Bulletin No. 2026–18 891 April 27, 2026
Table 2: Taxable payment instruments
Included by statuteIncluded by proposed regulations
- Cash
- Money orders
- Cashier's checks
- Traveler's checks
Table 3: Non-taxable payment instruments
Excluded by the statuteNot included by proposed regulations
- Direct debit from an account held in or by a financial
institution
- Debit cards and credit cards issued in the U.S.
- All other instruments not included by statute or regulations,
such as:
- Debit cards and credit cards issued outside the U.S.
- ACH transfers
- Personal or business checks used as payment
- General-use prepaid debit cards
By enumerating a finite list of instruments
that are subject to the remittance tax, the
proposed regulations provide clarification
and ease compliance burdens for senders
and remittance transfer providers. For
senders, knowing which payment instru-
ments give rise to taxable transfers elimi-
nates the uncertainty around the fees and
taxes they need to cover before they arrive
at the retail location to send remittance
transfers. For providers, having a finite,
exhaustive list of taxable payment instru-
ments provides needed certainty for pay-
ment system updates and compliance with
ETPR as well as for agent notifications
and trainings.
A traveler’s check—the only instru-
ment added by the proposed regulations
under the authority granted in section
4475(c)—is not a widely accepted pay-
ment method at remittance transfer pro-
viders. Based on information publicly
available to consumers, payment methods
accepted at retail locations are primarily
cash, and in some instances, debit and
credit cards. The Treasury Department
and the IRS therefore consider that add-
ing this instrument to the list of taxable
funding sources will have minimal effects
on the behavior of senders or remittance
transfer providers.
Other instruments were considered
and not added to the list. The Treasury
Department and the IRS determined that
ACH transfers, general-use prepaid cards,
and personal and business checks are not
“similar physical instruments” that trigger
the tax.
Debit and credit cards that are issued
in the United States are treated under the
law as not triggering the remittance trans-
fer tax when used to fund a remittance
transfer. The proposed regulations do not
include any credit or debit cards in the list
of tax-triggering instruments, even when
issued in a foreign country.
In general, if an instrument were added
to the taxable list, senders would likely
switch away from that type of payment
instrument towards non-taxable instru-
ments. The ability of a sender to switch
instruments depends on the characteristics
of the sender and the substitutability of the
instruments. For example, banked house-
holds would generally find it easy to find a
similar non-taxable funding instrument, as
many of the instruments are tied to having
an account at a financial institution. How-
ever, for non-banked households, substitu-
tion of payment methods is more difficult.
For such alternative methods to be consid-
ered, they need to meet two conditions: 1)
they must be accessible to senders, and 2)
using them should be less costly relative
to cash than the one percent remittance
tax. However, the Treasury Department
and the IRS consider that these conditions
would rarely both be met for non-banked
households.
20

Among the non-enumerated instru-
ments with reasonably wide acceptance
at remittance transmitters (although typ-
ically only through digital platforms),
general-use prepaid cards would likely be
the most accessible instrument to senders
with limited access to the banking system.
General-use prepaid cards are able to sup-
port many financial transactions on digital
platforms, and in some cases, can pres-
ent a close alternative to bank accounts.
21

However, general-use prepaid cards come
with numerous fees and charges, includ-
ing activation fees, monthly fees, reload-
ing fees, and many others the sum of
which add up to significantly more than
one percent of the usable card value in
most cases.
22
Therefore, obtaining a gen-
eral-use prepaid card solely for the pur-
pose of funding a remittance transfer and
avoiding the remittance transfer tax would
not be economical for most senders and
is unlikely to become economical in the
future.
20
In 2023, 66.2 percent of unbanked households only use cash. See FDIC National Survey of Unbanked and Underbanked Households in 2023, at https://www.fdic.gov/household-survey.
21
Users of reloadable prepaid cards report using them to receive direct deposits, pay monthly bills, build up savings, send and receive money transfers, and more. See more detail at https://
www.fdic.gov/household-survey.
22
See CFPB, What types of fees do prepaid cards typically charge? at https://www.consumerfinance.gov/ask-cfpb/what-types-of-fees-do-prepaid-cards-typically-charge-en-2053/#:~:tex-
t=With%20most%20prepaid%20cards%2C%20you,card%20and%20how%20it%27s%20used.

April 27, 2026 892 Bulletin No. 2026–18
There may be instruments not included
on the list of taxable funding instruments
that are not currently typically accepted
by remittance transfer providers but may
become more commonly accepted and
used once remittance transfer providers
and senders understand that these instru-
ments would result in non-taxable remit-
tance transfers. For example, remittance
transfer providers may change their poli-
cies to more commonly accept store gift
cards, gift certificates, or loyalty cards to
pay for remittance transfers, and some
senders may switch from cash to those
methods of payment. There is, however,
an anti-avoidance provision in the pro-
posed regulations that would limit the
ability to avoid the remittance tax through
buying a nontaxable payment instrument
with cash and immediately using it to fund
a remittance transfer.
5. Treatment of Check Cashing
Under the proposed regulations, checks
are not on the list of instruments that would
trigger the remittance tax. However, the
proposed regulations provide that when a
personal or business check payable to the
sender is cashed by a remittance transfer
provider (or their agent) and funds from
the cashed check are used to pay for a
remittance transfer, the remittance transfer
is treated as being paid for with cash and
is therefore taxable. This treatment applies
regardless of whether the sender ever has
possession of the cash from the cashed
check or whether the sender is charged an
explicit check-cashing fee.
In clarifying this treatment, the pro-
posed regulations provide clarity and
certainty to both remittance transfer pro-
viders and senders who engage in check
cashing transactions. This increased clar-
ity should lower compliance burdens for
remittance transfer providers since all
remittance transfers involving cashed
checks payable to the sender will be
treated the same way no matter whether
cash is handed back to the sender. In addi-
tion, this clarification eliminates poten-
tial avoidance behaviors using cashed
checks. In the absence of the proposed
regulations, senders who would have
otherwise funded a remittance with cash
may have switched to endorsing, say, a
payroll check and garnered the funds for
the remittance through check-cashing
services. Senders and remittance provid-
ers might have then claimed that such a
remittance transfer was not funded with
cash, particularly in the case of transac-
tions where cash from a cashed check
was not physically handed to the sender.
The Treasury Department and the IRS
do not have the data and models necessary
to quantify the economic effects of the pro-
posed regulations’ treatment of remittance
transfers that involve check-cashing ser-
vices, but NMLS annual data is available
on the volume of check-cashing by MSBs
and can provide information on how the
size of check cashing compares to money
transfers. Table 4 presents the total annual
volume of check-cashing by MSBs,
which reached about $18 billion in 2024.
Averaged across the years 2019-2024,
check-cashing volume is about 0.5 per-
cent of total domestic and foreign money
transfers and about 3 percent of total for-
eign only (remittance) money transfers.
The 3 percent represents an upper bound
of the amount of remittance transfers that
could have been funded by cashed checks,
but the Treasury Department and the IRS
consider 0.5 percent to be a more reason-
able estimate of the share of remittances
funded by cashed checks, as that assumes
that cashed checks were used to fund both
domestic and foreign transfers.
However, consumers cash checks at
MSBs for a variety of reasons and not
solely to furnish funds for money trans-
fers. Therefore, the total share of remit-
tances funded by cashed checks is likely
even lower than 0.5 percent.
Table 4: Size of check-cashing and money transfers (dollar amounts are in millions of USD)

Total check
cashing
Total money
transfer, domestic
and foreign
Share of check
cashing as a
percentage of all
money transfers
Total money
transfer, foreign
only
Share of check
cashing as a
percentage of
foreign money
transfers
201910,4361,310,1110.80%235,8204.43%
202017,8751,821,7700.98%273,2656.54%
202116,6233,768,8840.44%942,2211.76%
202214,0593,715,1010.38%965,9261.46%
202313,1593,770,4510.35%339,3413.88%
202417,9254,058,7160.44%365,2844.91%
Average15,0133,074,1720.49%520,3102.89%
6. Summary
Based on the available models and data,
the Treasury Department and the IRS esti-
mate that the economic costs and bene-
fits of the proposed regulations would be
small. The Treasury Department and the
IRS invite public comments and additional
data on the economic effects that would
result from these proposed regulations.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) (PRA) generally
requires that a Federal agency obtain

Bulletin No. 2026–18 893 April 27, 2026
the approval of OMB before collecting
information from the public, whether that
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control number
assigned by the OMB.
The collections of information in these
proposed regulations relate to report-
ing and recordkeeping requirements that
would allow section 4475 collectors to
meet their tax reporting obligations. The
collections of information would gener-
ally be used by the IRS for tax compli-
ance purposes and by collectors to facil-
itate proper tax reporting and compliance.
The likely respondents are corporations
and partnerships. The burden associated
with these information collections will be
included in Form 720 and its instructions
and approved with OMB control number
1545-0023 in accordance with PRA pro-
cedures under 5 CFR 1320.10.
Any burden associated with a claim
for refund of the remittance transfer tax
is included in the relevant form and its
instructions approved with the associated
OMB control number in accordance with
PRA procedures under 5 CFR 1320.10.
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 law. Generally, tax returns and
tax return information are confidential, as
required by section 6103.
III. Regulatory Flexibility Act
In accordance with the Regulatory
Flexibility Act (5 U.S.C. chapter 6)
(RFA), the Secretary of the Treasury
hereby certifies that these proposed
regulations will not have a significant
economic impact on a substantial num-
ber of small entities. This certification
is based on the fact that the remittance
transfer tax is imposed on senders, who
are defined in this notice of proposed
rulemaking as natural persons, and col-
lected by the approximately 600 remit-
tance transfer providers in the United
States,
23
few of which are likely to meet
the relevant definition of a small entity
under the RFA and regulations thereun-
der. Although some small entities, such
as grocery stores, convenience stores,
and pharmacies, are engaged as agents of
these remittance transfer providers, the
proposed regulations would clarify that
an entity is not deemed to be acting as a
remittance transfer provider when it per-
forms activities as an agent on behalf of a
remittance transfer provider. As a result,
any remittance transfer tax–related bur-
den borne by such a small entity would
be properly attributable to the remittance
transfer provider and not to the small
entity as such. Even were that not the
case, any remittance transfer tax–related
burden borne by an agent of a remittance
transfer provider (for example, additional
training), regardless of whether a small
entity for RFA purposes, would likely
constitute a small change in the already
existing burdens imposed by such enti-
ty’s contractual relationship with the
remittance transfer provider. These pro-
posed regulations will not, therefore,
create additional obligations for, or have
a significant economic impact on, a sub-
stantial number of small entities, and
analysis under the RFA is not required.
Notwithstanding this certification, the
Treasury Department and the IRS wel-
come comments on the impact of these
proposed regulations on small entities.
IV. Submission to the Small Business
Administration
Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking
has been submitted to the Chief Counsel
for the Office of Advocacy of the Small
Business Administration for comment on
its impact on small businesses.
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 rules do not include any Federal
mandate that may result in expenditures
by State, local, or Tribal governments,
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 and do
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are
submitted timely to the Treasury Depart-
ment and the IRS as prescribed in this
preamble under the ADDRESSES head-
ing. The Treasury Department and the IRS
request comments on all aspects of the
proposed regulations. Any electronic and
paper comments submitted will be made
available at https://www.regulations.gov
or upon request. Once submitted to the
Federal eRulemaking Portal, comments
cannot be edited or withdrawn.
A public hearing will be scheduled if
requested in writing by any person that
timely submits written comments. If a
23
A review of North American Industry Classification System (NAICS) data collected by the IRS showed that such data was insufficiently granular to identify the remittance transfer providers
within significantly broader categories, such as “Financial Transactions Processing, Reserve, and Clearinghouse Activities,” (NAICS Code 522320) and thus a poor indicator of the size of
such entities, regardless of how measured. For purposes of this RFA certification, the Treasury Department and the IRS are instead relying on publicly available data sources to estimate the
total number of remittance transfer providers in the United States.

April 27, 2026 894 Bulletin No. 2026–18
public hearing is scheduled, notice of
the date, time, and place for the hearing
will be published in the Federal Reg-
ister.
Statement of Availability of IRS
Documents
The IRS notice cited in this preamble is
published in the Internal Revenue Bulletin
and is available from the Superintendent
of Documents, U.S. Government Publish-
ing Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.
Drafting Information
The principal author of these proposed
regulations is Julia Barlow of the Office
of the Associate Chief Counsel (Energy,
Credits, and Excise Tax). However, other
personnel from the Treasury Department
and the IRS participated in their develop-
ment.
List of Subjects
26 CFR Part 40
Excise taxes, Reporting and record-
keeping requirements.
26 CFR Part 49
Excise taxes, Reporting and record-
keeping requirements, Telephone, Trans-
portation.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
parts 40 and 49 as follows:
Part 40—Excise Tax Procedural
Regulations
Paragraph 1. The authority citation
for part 40 continues to read, in part, as
follows:
Authority: 26 U.S.C. 7805.
* * * * *
Par. 2. Section 40.0-1 is amended by
revising paragraphs (a) and (e) to read as
follows:
§ 40.0-1 Introduction.
(a) In general. The regulations in this
part are designated the Excise Tax Pro-
cedural Regulations. The regulations in
this part set forth administrative provi-
sions relating to the excise taxes imposed
by chapters 31 through 34, 36, 38, 39,
49, and 50A of the Internal Revenue
Code (Code) (except for the chapter 32
tax imposed by section 4181 (firearms
tax) and the chapter 36 taxes imposed by
sections 4461 (harbor maintenance tax)
and 4481 (heavy vehicle use tax)), and
to floor stocks taxes imposed on articles
subject to any of these taxes. Chapter 31
relates to retail excise taxes; chapter 32
to manufacturers’ excise taxes; chapter
33 to taxes imposed on communications
services and air transportation services;
chapter 34 to taxes imposed on certain
insurance policies; chapter 36 to taxes
imposed on transportation by water and
remittance transfers; chapter 38 to envi-
ronmental taxes; chapter 39 to taxes
imposed on registration-required obli-
gations; chapter 49 to taxes imposed
on indoor tanning services; and chapter
50A to taxes imposed on the sale of des-
ignated drugs. References in this part to
taxes also include references to the fees
imposed by sections 4375 and 4376 of
the Code. See parts 43, 46 through 49,
and 52 of this chapter for regulations
related to the imposition of tax.
* * * * *
(e) Applicability dates—(1) Para-
graph (a). Paragraph (a) of this section
applies to returns required to be filed
under § 40.6011(a)-1 for calendar quarters
beginning on or after [date of publication
of final regulations in the Federal Reg-
ister]. For rules that apply before [date
of publication of final regulations in the
Federal Register], see 26 CFR part 40,
revised as of April 1, 2025.
* * * * *
PART 49—FACILITIES AND
SERVICES EXCISE TAXES
Par. 3. The authority citation for part
49 is amended by adding an entry for §
49.4475-1 in numerical order to read, in
part, as follows:
Authority: 26 U.S.C. 7805.
* * * * *
Section 49.4475-1 also issued under 26
U.S.C. 4475(b) and (c).
Par. 4. Section 49.0-1 is amended by
revising the second sentence to read as
follows:
§ 49.0-1 Introduction.
* * * The regulations relate to the taxes
on communications and transportation by
air imposed by chapter 33 of the Internal
Revenue Code (Code), the tax on remit-
tance transfers imposed by section 4475
of the Code, and the taxes on indoor tan-
ning services imposed by section 5000B
of the Code. * * *
Subpart G [Redesignated as Subpart
H]
Par. 5. Subpart G is redesignated as
subpart H.
Par. 6. Add a new subpart G to read as
follows:
Subpart G—Remittance Transfers
§ 49.4475-1 Remittance transfers.
(a) In general. Section 4475(a) of the
Internal Revenue Code (Code) imposes a
1 percent tax on taxable remittance trans-
fers (remittance transfer tax). Paragraph
(b) of this section provides definitions that
apply for purposes of section 4475 and this
section. Paragraph (c) of this section pro-
vides rules regarding when the remittance
transfer tax attaches to taxable remittance
transfers described in paragraph (d) of this
section. Paragraph (e) of this section pro-
vides examples that illustrate the applica-
tion of section 4475 and this section.
(b) Definitions. The following defini-
tions apply for purposes of section 4475
and this section.
(1) Cash. The term cash means United
States dollars or any foreign currency in
physical form that is issued by a govern-
ment or a central bank.
(2) Consumer. The term consumer
means a natural person.
(3) Designated recipient. The term
designated recipient means any person
specified by the sender as the authorized
recipient of a remittance transfer to be
received at a location in a foreign country.
A remittance transfer is received at a loca-

Bulletin No. 2026–18 895 April 27, 2026
tion in a foreign country if funds are to be
received at a location physically outside
of any State.
(4) Remittance transfer—(i) In gen-
eral. The term remittance transfer means
the electronic transfer of funds requested
by a sender to a designated recipient that
is sent by a remittance transfer provider.
The term applies regardless of whether the
sender holds an account with the remit-
tance transfer provider.
(ii) Exclusions. The term remittance
transfer does not include—
(A) Small value transactions. Trans-
fer amounts, as described in 12 CFR
1005.31(b)(1)(i) revised as of January 1,
2026, of $15.00 or less.
(B) Securities and commodities trans-
fers. Any transfer that is excluded from
the definition of electronic fund transfer
under 12 CFR 1005.3(c)(4) revised as of
January 1, 2026.
(5) Remittance transfer provider—(i)
In general. The term remittance transfer
provider means any person that provides
remittance transfers for a consumer in the
normal course of its business, regardless
of whether the consumer holds an account
with such person. A person is not a remit-
tance transfer provider merely because it
performs activities as an agent on behalf of
a remittance transfer provider. For exam-
ple, a grocery store would not be a remit-
tance transfer provider merely because it
acts as an agent of a remittance transfer
provider to offer consumers remittance
transfer services.
(ii) Non-applicability of normal-
course-of-business safe harbor. For pur-
poses of section 4475 and this section, the
safe harbor provided in 12 CFR 1005.30(f)
(2), which provides a threshold number of
remittance transfers below which a person
is deemed not to be providing remittance
transfers for a consumer in the normal
course of its business, does not apply.
(6) Sender. The term sender means
a consumer in a State who primarily for
personal, family, or household purposes
requests a remittance transfer provider to
send a remittance transfer to a designated
recipient.
(7) State. The term State means any
State or territory of the United States, or
the District of Columbia.
(c) Attachment of tax—(1) In general.
The remittance transfer tax attaches at the
time a remittance transfer described in
paragraph (d) of this section is made. A
remittance transfer is made at the earlier
of the time the remittance transfer is ini-
tiated by the remittance transfer provider
or the time the sender pays the remittance
transfer provider (or its agent). For exam-
ple, if a sender pays for a remittance trans-
fer on December 31, 2026, the remittance
transfer provider initiates the transfer on
the same day, and the funds are disbursed
to the designated recipient on January 2,
2027, such remittance transfer occurred
on December 31, 2026, and is reportable
for the fourth calendar quarter of 2026 and
not in the first calendar quarter of 2027.
See part 40 of this chapter for rules relat-
ing to returns, payments, deposits, and
other procedural rules applicable to this
section.
(2) Canceled or expired remittance
transfers. The remittance transfer tax
attaches when the remittance transfer is
made regardless of whether the remittance
transfer is ever paid out to the designated
recipient (for example, if the transfer was
canceled or expired). In a case in which
the transfer is canceled or expires and
the amount of the remittance transfer is
returned to the sender, the sender may be
eligible to file a claim for refund of the
remittance transfer tax with the Internal
Revenue Service. See sections 6401 and
6402 of the Code.
(d) Taxable remittance transfers—(1)
In general. The remittance transfer tax
applies only to remittance transfers for
which the sender provides cash, a money
order, a cashier’s check, or a traveler’s
check to the remittance transfer provider.
Subject to the anti-avoidance rule in para-
graph (d)(4) of this section, this is the
exclusive list of instruments that, when
provided to a remittance transfer provider,
trigger the remittance transfer tax. Settle-
ment of the issuer’s payment obligation to
the remittance transfer provider under a
money order, cashier’s check, or traveler’s
check does not constitute withdrawal for
purposes of section 4475(d)(1) and, con-
sequently, the source of any funds trans-
ferred is not relevant if such instruments
have been provided to a remittance trans-
fer provider.
(2) Personal or business check cashed
by remittance transfer provider. If a
remittance transfer provider (or its agent)
cashes a personal or business check pay-
able to the sender and some or all of the
cash from the check cashing is used to
fund a remittance transfer, such trans-
action is treated as a remittance transfer
for which the sender provides cash to the
remittance transfer provider, regardless of
whether the sender ever has actual posses-
sion of any resulting cash.
(3) Amount subject to taxation. The
remittance transfer tax is imposed on the
total amount that will be transferred to
the designated recipient, including any
amount provided by the sender, the remit-
tance transfer provider, or any other person
(for example, promotional bonuses or dis-
counts), regardless of how such amounts
are characterized for purposes of the
remittance transfer. Fees, taxes, and other
amounts that will not be transferred to the
designated recipient with respect to any
remittance transfer, including the amount
of the remittance transfer tax imposed, are
excluded from the total amount on which
the remittance transfer tax is imposed.
(4) Transactions for tax-avoidance
purposes. If a sender and remittance
transfer provider (or its agent) or third
party engage in a transaction (or series of
transactions) with a principal purpose of
avoiding the remittance transfer tax, the
Secretary may disregard or recharacterize
the transaction (or series of transactions)
in accordance with its substance. The
determination of whether a sender and
remittance transfer provider (or its agent)
or third party have engaged in a transac-
tion (or series of transactions) with a prin-
cipal purpose of avoiding the tax is based
on all facts and circumstances, including
a remittance transfer provider’s or third
party’s pattern of conduct, the timing of
the transactions involved, the amount of
the transactions involved, and the rela-
tionship between any parties involved.
For example, if a sender provides $500.00
in cash to a remittance transfer provider
(or its agent) in exchange for a general-use
prepaid card loaded with $500.00 and then
immediately initiates a remittance transfer
in the amount of $500.00 paid for with
the general-use prepaid card, the series of
transactions (the purported purchase of a
general-use prepaid card immediately fol-
lowed by a remittance transfer) may be
recharacterized as a remittance transfer
in which the sender provided cash to the

April 27, 2026 896 Bulletin No. 2026–18
remittance transfer provider. As a result,
the remittance transfer tax attaches to the
remittance transfer and, if not collected
from the sender at the time of attachment,
becomes a liability of the remittance trans-
fer provider. The same result would arise
if, under the same sequence of events, the
consumer immediately provides the gen-
eral-use prepaid card to a relative who
initiates the remittance transfer with the
remittance transfer provider.
(e) Examples—(1) In general. The following
examples illustrate the application of section 4475
and this section. For purposes of these examples,
Sender is a sender as defined in paragraph (b)(6) of
this section, Designated Recipient is a designated
recipient as defined in paragraph (b)(3) of this sec-
tion, and Remittance Transfer Provider is a remit-
tance transfer provider as defined in paragraph (b)(5)
of this section. Retailer is a retailer that accepts pay-
ments for remittance transfers from consumers and
remits such payments to Remittance Transfer Pro-
vider (as an agent of Remittance Transfer Provider).
(2) Example 1: Fees, taxes, and bonuses—(i)
Facts. Sender engages Remittance Transfer Provider
through Retailer in State A to transfer $1,000.00 to
Designated Recipient. Sender pays cash to Retailer
for the remittance transfer. Remittance Transfer Pro-
vider charges a service fee of $20.00 for the remit-
tance transfer and, as part of a marketing promotion,
transmits an additional $5.00 “bonus” to Designated
Recipient. State A imposes a $12.00 tax on the trans-
action.
(ii) Analysis. Because Sender, Designated Recip-
ient, and Remittance Transfer Provider are a sender,
designated recipient, and remittance transfer pro-
vider, respectively, as those terms are defined in
paragraph (b) of this section, and because Sender
requested an electronic transfer of funds to Desig-
nated Recipient, the transfer qualifies as a remittance
transfer under the definitions provided in paragraph
(b) of this section. Moreover, because Sender has
provided Retailer (as an agent of Remittance Trans-
fer Provider) an instrument described in paragraph
(d)(1) of this section (cash), the remittance transfer
is, upon payment by Sender, subject to the remittance
transfer tax. The total amount transferred to Desig-
nated Recipient is $1,005.00, which includes the
amount provided by Sender to be sent to Designated
Recipient ($1,000.00) and the “bonus” transmitted
to Designated Recipient by Remittance Transfer
Provider ($5.00) but excludes Remittance Transfer
Provider’s service fee ($20.00) and the State A tax
($12.00), neither of which are sent to Designated
Recipient. The remittance transfer tax imposed is
one percent of $1,005.00, or $10.05.
(3) Example 2: Remittance transfer paid for with
a personal check—(i) Facts. The facts are the same
as those provided in paragraph (e)(2)(i) of this sec-
tion (Facts of Example 1), except that Sender pro-
vides Retailer (as an agent of Remittance Transfer
Provider) with a personal check payable to Remit-
tance Transfer Provider.
(ii) Analysis. For the reasons provided in para-
graph (e)(2)(ii) of this section (Analysis of Exam-
ple 1), the transfer qualifies as a remittance trans-
fer under the definitions provided in paragraph (b)
of this section. Sender has not, however, provided
Retailer (as an agent of Remittance Transfer Pro-
vider) any instrument described in paragraph (d)(1)
of this section. As a result, the remittance transfer
will not, upon payment by Sender, be subject to tax-
ation under section 4475(a). The result would be the
same if Sender had instead provided, for example, a
debit card, general-use prepaid card, credit card, or
store gift card.
(4) Example 3: Remittance transfer paid for
using check-cashing service—(i) Facts. The facts
are the same as those provided in paragraph (e)
(2)(i) of this section (Facts of Example 1), except
that Remittance Transfer Provider offers custom-
ers a check cashing service for a fee of $4.00 and
Sender provides Retailer (as an agent of Remittance
Transfer Provider) a $1,000.00 paycheck payable
to Sender and requests a transfer in the amount of
$800.00. Retailer (as an agent of Remittance Trans-
fer Provider) charges Sender the Remittance Trans-
fer Provider’s $20.00 service fee and the State A’s
$12.00 tax, but does not charge Sender the $4.00
check-cashing fee.
(ii) Analysis. For the reasons provided in
paragraph (e)(2)(ii) of this section (Analysis of
Example 1), the transfer qualifies as a remittance
transfer under the definitions provided in para-
graph (b) of this section. Under paragraph (d)
(2) of this section, the transaction is treated as a
remittance transfer for which the sender provided
cash. This is true despite the fact that Retailer (as
an agent of Remittance Transfer Provider) did not
charge Sender the $4.00 check-cashing fee. As a
result, the remittance transfer is, upon payment by
Sender, subject to taxation under section 4475(a).
The remittance transfer tax imposed is one percent
of $805.00, or $8.05.
(f) Applicability date. This section
applies to remittance transfers made in
calendar quarters beginning on or after
[date of publication of final regulations in
the Federal Register].
Frank J. Bisignano,
Chief Executive Officer.
(Filed by the Office of the Federal Register April 10,
2026, 8:45 a.m., and published in the issue of the
Federal Register for April 13, 2026, 91 FR 18797)

Bulletin No. 2026–18 i April 27, 2026
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.

April 27, 2026 ii Bulletin No. 2026–18
Numerical Finding List
1
Bulletin 2026–18
Announcements:
2026-1, 2026-04 I.R.B. 402
2026-2, 2026-05 I.R.B. 447
2026-3, 2026-06 I.R.B. 518
2026-4, 2026-06 I.R.B. 533
2026-5, 2026-07 I.R.B. 540
2026-6, 2026-10 I.R.B. 634
2026-7, 2026-11 I.R.B. 697
2026-8, 2026-16 I.R.B. 813
2026-9, 2026-18 I.R.B. 881
Notices:
2026-2, 2026-02 I.R.B. 304
2026-3, 2026-02 I.R.B. 307
2026-5, 2026-02 I.R.B. 309
2026-6, 2026-02 I.R.B. 313
2026-1, 2026-04 I.R.B. 365
2026-8, 2026-04 I.R.B. 368
2026-10, 2026-04 I.R.B. 378
2026-11, 2026-06 I.R.B. 491
2026-12, 2026-06 I.R.B. 496
2026-13, 2026-06 I.R.B. 499
2026-9, 2026-07 I.R.B. 534
2026-7, 2026-11 I.R.B. 637
2026-14, 2026-11 I.R.B. 654
2026-15, 2026-11 I.R.B. 658
2026-16, 2026-11 I.R.B. 685
2026-17, 2026-12 I.R.B. 698
2026-4, 2026-13 I.R.B. 726
2026-19, 2026-15 I.R.B. 797
2026-20, 2026-15 I.R.B. 800
2026-22, 2026-15 I.R.B. 802
2026-23, 2026-15 I.R.B. 804
2026-24, 2026-17 I.R.B. 835
2026-25, 2026-17 I.R.B. 836
2026-26, 2026-18 I.R.B. 878
Proposed Regulations:
REG-101952-24, 2026-03 I.R.B. 345
REG-110519-25, 2026-03 I.R.B. 353
REG-132251-11; REG-134219-08,
2026-03 I.R.B. 358
REG-103430-24, 2026-05 I.R.B. 447
REG-112829-25, 2026-05 I.R.B. 452
REG-113515-25, 2026-05 I.R.B. 455
REG-121244-23, 2026-09 I.R.B. 579
REG-105064-25, 2026-13 I.R.B. 735
REG-108921-25, 2026-13 I.R.B. 756
REG-117002-25, 2026-13 I.R.B. 761
REG-117270-25, 2026-13 I.R.B. 772
REG-117298-21, 2026-14 I.R.B. 784
REG-114499-25, 2026-18 I.R.B. 883
Revenue Procedures:
2026-1, 2026-01 I.R.B. 1
2026-2, 2026-01 I.R.B. 119
2026-3, 2026-01 I.R.B. 143
2026-4, 2026-01 I.R.B. 160
2026-5, 2026-01 I.R.B. 258
2026-6, 2026-02 I.R.B. 314
2026-7, 2026-02 I.R.B. 316
2026-8, 2026-04 I.R.B. 380
2026-9, 2026-04 I.R.B. 393
2026-10, 2026-04 I.R.B. 394
2026-12, 2026-07 I.R.B. 535
2026-13, 2026-09 I.R.B. 563
2026-11, 2026-12 I.R.B. 707
2026-15, 2026-13 I.R.B. 729
2026-16, 2026-13 I.R.B. 733
2026-17, 2026-15 I.R.B. 805
Revenue Rulings:
2026-1, 2026-02 I.R.B. 299
2026-2, 2026-03 I.R.B. 342
2026-3, 2026-06 I.R.B. 485
2026-4, 2026-06 I.R.B. 487
2026-5, 2026-08 I.R.B. 542
2026-6, 2026-11 I.R.B. 635
2026-7, 2026-15 I.R.B. 791
2026-8, 2026-16 I.R.B. 812
Treasury Decisions:
10042, 2026-03 I.R.B. 320
10041, 2026-04 I.R.B. 360
10039, 2026-05 I.R.B. 403
10040, 2026-05 I.R.B. 416
10043, 2026-15 I.R.B. 793
10044, 2026-18 I.R.B. 840
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
2024–52, dated December 22, 2024.

Bulletin No. 2026–18 iii April 27, 2026
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2026–18
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
2024–52, dated December 22, 2024.

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