No Tax on Tips: What Streamers & Creators Need to Know
Recent guidance tied to the One Big Beautiful Bill (signed July 4, 2024) indicates that “Digital Content Creators” are included among occupations eligible for a new federal tax deduction on tips. That means tips such as Twitch “Bits” or YouTube “Super Thanks” could be excluded from taxable income — with important limits and caveats.
Key points
- Deduction: Up to $25,000 per year of tips may be deductible from federal taxable income.
- Phase-out: The deduction phases out for single filers with higher incomes (starts > $150,000 and phases out fully at higher thresholds).
- Exclusions: Treasury guidance notes tips won’t qualify “if received in the course of certain specified trades or businesses,” including fields such as health, performing arts, and athletics. The final occupational classifications may change.
- Multiple income streams: Creators often have subscriptions, ad revenue, sponsorships, direct sales, and tips — how much this deduction helps will vary by individual situation.
Examples
If you’re a Twitch streamer getting Bits or a YouTuber receiving Super Thanks, that tipped income may be deductible up to the cap. But if your activity falls under an excluded occupational classification, it may not qualify.
Where to read more
- Official IRS summary of the One Big Beautiful Bill provisions: https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions
- Explainer from Bipartisan Policy Center: https://bipartisanpolicy.org/explainer/how-does-no-tax-on-tips-work-in-the-one-big-beautiful-bill
Caveat: Treasury/IRS occupational lists and final guidance are subject to change. If this affects you, consult a tax professional before changing how you report income or accept tips.
Questions or experiences to share? Drop a comment below — how would this change your tipping strategy?