💰 Are Tips Taxable? 2025 No Tax on Tips Update for Online Creators

Updated: July 2025

Starting January 1, 2025, the One Big Beautiful Bill introduced a new federal tax exemption that directly impacts creators earning tips online. If you're a content creator on platforms like OnlyFans, YouTube, Twitch, or Twitter, here's what you need to know.

✨ What Changed?

The bill includes a “No Tax on Tips” provision, allowing creators to deduct up to $25,000 in reported tips from their federal taxable income (retroactive to Jan 1, 2025 through 2028).

• ✔️ Applies to W-2 employees, 1099-NEC contractors, and 1099-K platform earners
• ✔️ Deductible if tips are voluntarily paid (not service charges)
• ✔️ Must be in an occupation traditionally tipped (to be defined by the Treasury)

🎥 How It Affects Creators

If you stream or earn money through fan support (like tips or donations), this deduction can reduce your tax bill — as long as the tip is voluntary and recorded.

• 👩‍💻 OnlyFans creators — qualify if fans voluntarily tip you outside of subscription
• 📺 YouTubers & Streamers — YouTube “Super Chat” or Twitch Bits may count
• 📬 Twitter/X creators — fan-based “tip jar” donations may qualify

🧾 How to Claim the Tip Deduction

1. 📑 Track tips in your accounting or banking app
2. 💼 Report them on your Schedule C if self-employed
3. 🧮 Use IRS Form 4137 if tips are unreported W-2 income
4. 🔢 Subtract from income up to the $25,000 cap

Note: This deduction does NOT apply to automatic service charges (like restaurant gratuities) or creator bonuses classified as contractual income.

📌 Related Articles

• 1099-K for Creators: What Changed in 2025?
• What Is IRS Form 1099-K? A Guide for Creators

🚨 Important Considerations

• ⚠️ Tips are still subject to Social Security & Medicare tax (not exempt)
• ⚠️ Tips must be properly tracked and reported to qualify
• ⚠️ Your Social Security number must be valid and eligible

🧠 Bonus: Zoho Expense Tip Tracking

Use Zoho Expense to track tips and categorize income separately from business payments. It offers mobile mileage tracking, receipt scanning, and IRS-compliant expense reports. Perfect for creators managing tips, travel, and promo expenses.

📅 Effective Dates

• 🗓️ Applies to tips earned in tax years 2025 through 2028
• 🗂️ You'll claim the deduction when you file your 2025 tax return in 2026

❓ FAQ

• Q: Will I get taxed on tips from OnlyFans?
  A: Not if the tips are voluntary and fall within the $25,000 deduction cap. Make sure you report and track them properly.
• Q: Can I claim tips sent to me through CashApp or PayPal?
  A: Yes, if they are voluntary and you report them on your tax return using 1099-K or 1099-NEC data.
• Q: Do I still have to report my tips?
  A: Yes! Tips must be reported — this law just provides a deduction, not a reporting exemption.

📌 Disclaimer:
This article is for educational purposes and does not constitute tax, legal, or financial advice. Always consult with a tax professional for guidance specific to your situation. Tax rules may vary by state and are subject to change.