Tipped occupations ยท Home Services
Home Services Tips and the 2026 Tips Deduction: Codes 401 to 409
Nine occupations in the Home Services category of the final regulations (T.D. 10044) sit behind the 2026 tips deduction: the trades and services that come to the house, from home maintenance and repair (code 401) through home cleaning services (code 407) to roadside assistance (code 409), each with its own code in the table below. Home services work is engaged three different ways, and the way a worker is engaged decides where the tips are reported: employed by a service company, hired directly by the householder as a household employee, or self-employed with a business of one's own. The IRS draws the second of those lines in its own words: housekeepers, maids, and gardeners who perform household work in or around a private residence as employees are household employees, while repairmen, plumbers, and contractors who provide their services as independent contractors are not (IRS Topic No. 756).
Last reviewed: November 4, 2026.
The facts, in one table
| Treasury Tipped Occupation Codes | 401 to 409, the whole Home Services category. All nine codes, with the regulations' own examples, are in the table below |
|---|---|
| Category in the final regulations | Home Services |
| The three reporting routes | Employed by a service company: a W-2 with code TP. Household employee: a W-2 from the householder, who reports household employment taxes on Schedule H. Self-employed: tips as business receipts on Schedule C, with the net income limit the IRS states for the self-employed (Tax Tip 2026-26) |
| Also inside code 401 | Maintenance workers in residential buildings. The Treasury Department and the IRS state that residential building maintenance workers fit under Home Maintenance and Repair Workers (T.D. 10044) |
| The household threshold for 2026 | A householder who pays cash wages of $3,000 or more in 2026 to any one household employee generally must withhold and pay Social Security and Medicare tax on those wages, and issue that employee a Form W-2 (IRS Topic No. 756) |
| The deduction | Up to $25,000 of qualified tips per return, for tax years 2025 through 2028, claimed on Schedule 1-A whether or not you itemize |
| Phaseout | The amount after the $25,000 limit is reduced by $100 for each $1,000 of modified adjusted gross income over $150,000, or $300,000 on a joint return, counting whole $1,000 steps only (section 224(b)(2) of the Internal Revenue Code; 26 CFR 1.224-1(b)(2)) |
| Payroll tax | Unchanged. Tips are wages for Social Security and Medicare tax in full; the deduction reduces income tax only |
Read the code the way the site reads the whole list: appearing on the Treasury list is a published fact about an occupation. It is not a decision about any one worker, and the rest of the rules on this page, the reporting rule in particular, decide what a deduction is built from. The full list of 71 codes is on the Treasury Tipped Occupation Codes page.
The nine Home Services codes
| Code | Occupation, as titled in T.D. 10044 | Examples given in the regulations |
|---|---|---|
| 401 | Home Maintenance and Repair Workers | Handyman, roofer, window repairer, house painter, flooring installer |
| 402 | Home Landscaping and Groundskeeping Workers | Lawn mower, gardener, tree trimmer, weed sprayer |
| 403 | Home Electricians | Electrician |
| 404 | Home Plumbers | Plumber, pipefitter, steamfitter, sprinkler installer |
| 405 | Home Heating and Air Conditioning Mechanics and Installers | Air conditioning repairer, heating system installer, chimney sweep |
| 406 | Home Appliance Installers and Repairers | Washing machine installer, dishwasher repairer |
| 407 | Home Cleaning Service Workers | House cleaner, pool cleaner, carpet cleaner, window washer |
| 408 | Locksmiths | Safe installer, key maker |
| 409 | Roadside Assistance Workers | Tow truck driver, car battery technician, tire repairer, car fuel deliverer |
nine codes, one table above
Three ways home services work is engaged, three reporting routes
Employed by a service company. A cleaner sent out by a cleaning company, a plumber on a firm's payroll, a landscaper on a crew: the ordinary employee route. Cash tips of $20 or more in a calendar month are reported to the employer by the tenth day of the following month (IRS Topic No. 761), and the employer prints the reported total in Box 12 code TP with the worker's occupation code in Box 14b.
Hired directly by the householder. This is the household employee case, and the IRS test is about control: household workers are the householder's employees if the householder can control not only the work they do, but also how they do it. Topic No. 756 names housekeepers, maids, babysitters, and gardeners as examples. Where the line is crossed, the householder is an employer for tax purposes: at cash wages of $3,000 or more in 2026 to one household employee, Social Security and Medicare tax must be withheld and paid, the householder reports on Schedule H with their own return, and the worker receives a Form W-2 from the householder. Tips reported to the householder sit in that W-2's code TP like any other employer's.
Self-employed. Topic No. 756 states the other side of the same line: repairmen, plumbers, contractors, and other business people who provide their services as independent contractors are not household employees. Most of the trades in this category work this way, running their own businesses. There is no W-2 and no code TP; tips are business receipts on Schedule C, your own invoices and records separate them from the price of the job, and the IRS caps a self-employed worker's tips deduction at the net income from the business in which the tips were received (Tax Tip 2026-26). The 1099 tax calculator, the self-employment tax explainer, and the Schedule C deductions checklist cover that side of the system.
What counts as a qualified tip in home services work
A qualified tip is a voluntary payment, in an amount the customer decides, received in an occupation on the Treasury list. Sorted by the IRS definitions, the cases this work actually produces are these:
- Cash a customer hands you at the door after a job, in an amount they choose: the core case, a tip on any of the three routes.
- A tip the customer adds to a card payment or writes onto your invoice: a charged tip, if the customer chose the amount freely. Charged tips are cash tips in the IRS definition (Topic No. 761).
- A set percentage or service fee your business adds to every bill: not a tip, even where you keep every cent of it. It is an amount the customer must pay, set by the business, so it is part of the price, business receipts rather than a qualified tip. A voluntary amount the customer adds on top of it is a tip.
- "Keep the change" on a cash payment: the part above the agreed price is the tip; the agreed price itself is not. The regulations define a tip as the amount in excess of what was agreed, required, or charged for the service (26 CFR 1.224-2).
- A gratuity for a whole crew, handed to one worker to split: tips received under a tip-sharing arrangement are cash tips for each person who receives a share.
- A gift card from a customer: counts as a cash medium; the regulations list gift cards among the forms a cash tip can take. A non-cash gift that cannot be exchanged for a fixed amount of cash, such as a meal or event tickets, is not a cash tip under the same definition.
household employees run on Schedule H
The wage under the tips
Pay in this group is set three different ways: a service company's wage, where the Department of Labor table below applies; a household wage agreed with the householder; or your own prices, where no wage table reaches. The table is printed in full, as the Department of Labor publishes it, because it governs the company route and is the reference the other routes are compared against.
| Minimum wage the combined pay must reach | $7.25 an hour |
|---|---|
| Lowest cash wage an employer may pay a tipped employee | $2.13 an hour |
| Maximum tip credit | $5.12 an hour |
| Tipped employee, federal definition | A worker in an occupation that customarily and regularly receives more than $30 a month in tips |
The tip credit is a credit toward the minimum wage, not a discount on it: the employer may count up to $5.12 an hour of a tipped employee's tips toward the $7.25, and if cash wages plus tips do not reach the full minimum wage, the employer owes the difference. States set their own floors on top of the federal one, and the full state table, exactly as the U.S. Department of Labor publishes it, follows. Source: U.S. Department of Labor, Wage and Hour Division, "Minimum Wages for Tipped Employees", last revised July 1, 2026, retrieved November 4, 2026.
States that require the full state minimum wage before tips
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Alaska | $14.00 | |||
| California | $16.90 | |||
| Guam | $9.25 | |||
| Minnesota | $11.41 | |||
| Montana: business with gross annual sales over $110,000 | $10.85 | |||
| Montana: business not covered by the Fair Labor Standards Act, with gross annual sales of $110,000 or less | $4.00 | |||
| Nevada | $12.00 | |||
| Oregon | $15.55 (standard statewide); $16.80 (Portland metro); $14.55 (nonurban counties) | |||
| Washington | $17.13 |
States that require a minimum cash wage above the federal $2.13 an hour
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Arizona | $15.15 | $3.00 | $12.15 | Not specified |
| Arkansas | $11.00 | $8.37 | $2.63 | Not specified |
| Colorado | $15.16 | $3.02 | $12.14 | More than $30 |
| Connecticut: hotel and restaurant workers | $16.94 | $10.56 | $6.38 | Not specified |
| Connecticut: bartenders who customarily receive tips | $16.94 | $8.71 | $8.23 | |
| Delaware | $15.00 | $12.77 | $2.23 | More than $30 |
| District of Columbia | $18.40 | $8.10 | $10.30 | Not specified |
| Florida | $14.00 | $3.02 | $10.98 | More than $30 |
| Hawaii | $16.00 | $1.25 | $14.75 | |
| Idaho | $7.25 | $3.90 | $3.35 | More than $30 |
| Illinois | $15.00 | 40 percent of the applicable minimum wage ($6.00) | $9.00 | Not specified |
| Iowa | $7.25 | 40 percent of the applicable minimum wage ($2.90) | $4.35 | More than $30 |
| Maine | $15.10 | 50 percent of the applicable minimum wage ($7.55) | $7.55 | More than $191 |
| Maryland | $15.00 | $11.37 | $3.63 | More than $30 |
| Massachusetts | $15.00 | $8.25 | $6.75 | More than $20 |
| Michigan | $13.73 | $8.24 | $5.49 | Not specified |
| Missouri | $15.00 | 50 percent of the applicable minimum wage ($7.50) | $7.50 | Not specified |
| New Hampshire | $7.25 | $3.98 | $3.27 | More than $30 |
| New Jersey | $15.92 | $9.87 | $6.05 | More than $30 |
| New Mexico | $12.00 | $9.00 | $3.00 | More than $30 |
| New York | $17.00 (New York City, Long Island and Westchester); $16.00 (remainder of the state) | Varies by region and type of employer | Varies by region and type of employer | Not specified |
| North Dakota | $7.25 | 33 percent of the applicable minimum wage ($2.39) | $4.86 | More than $30 |
| Ohio: employers with annual gross receipts of $405,000 or more | $11.00 | $5.50 | $5.50 | More than $30 |
| Oklahoma | $7.25 | $5.12 | $2.13 | Not specified |
| Pennsylvania | $7.25 | $4.42 | $2.83 | $135 |
| Rhode Island | $16.00 | $12.11 | $3.89 | More than $30 |
| South Dakota | $11.85 | 50 percent of the applicable minimum wage ($5.92) | $5.93 | More than $35 |
| Vermont | $14.42 | 50 percent of the applicable minimum wage ($7.21) | $7.21 | More than $120 |
| Virgin Islands | $10.50 | $6.30 | 40 percent of the applicable minimum wage ($4.20) | Not specified |
| Wisconsin | $7.25 | $4.92 | $2.33 | Not specified |
| West Virginia | $8.75 | 70 percent of the applicable minimum wage ($6.13) | $2.62 | Not specified |
States where the minimum cash wage is the federal $2.13 an hour
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Alabama | $7.25 | $5.12 | $2.13 | More than $30 |
| American Samoa | Special minimum wage rates apply | $2.13 | More than $30 | |
| Georgia | $7.25 | $5.12 | $2.13 | More than $30 |
| Indiana | $7.25 | $5.12 | $2.13 | More than $30 |
| Kansas | $7.25 | $5.12 | $2.13 | Not specified |
| Kentucky | $7.25 | $5.12 | $2.13 | More than $30 |
| Louisiana | $7.25 | $5.12 | $2.13 | More than $30 |
| Mississippi | $7.25 | $5.12 | $2.13 | More than $30 |
| Nebraska | $15.00 | $12.87 | $2.13 | Not specified |
| North Carolina | $7.25 | $5.12 | $2.13 | More than $20 |
| Northern Mariana Islands | $7.25 | $5.12 | $2.13 | More than $30 |
| Puerto Rico | $10.50 | $8.37 | $2.13 | More than $30 |
| South Carolina | $7.25 | $5.12 | $2.13 | More than $30 |
| Tennessee | $7.25 | $5.12 | $2.13 | More than $30 |
| Texas | $7.25 | $5.12 | $2.13 | More than $20 |
| Utah | $7.25 | $5.12 | $2.13 | More than $30 |
| Virginia | $12.77 | $10.64 | $2.13 | More than $30 |
| Wyoming | $7.25 | $5.12 | $2.13 | More than $30 |
- Florida: the figures above are the ones in the July 1, 2026 revision. The Department of Labor's own footnote to this table states that the Florida minimum wage is scheduled to increase by $1.00 every year on September 30 until reaching $15.00 on September 30, 2026.
- Hawaii: the tip credit is permissible only if the combined amount the employee receives from the employer and in tips is at least $7.00 more than the applicable minimum wage.
- Michigan: the Department of Labor's footnote states that the Michigan tipped cash wage is scheduled to increase annually until it reaches 50 percent of the state minimum wage in 2031, and that the Michigan minimum wage is scheduled to increase to $15.00 on January 1, 2027.
- District of Columbia: employers must currently pay a minimum cash wage of at least 56 percent of the standard minimum wage.
- No state minimum wage law: Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no state minimum wage law, and Georgia's law does not apply to tipped employees; employers covered by the Fair Labor Standards Act in those states pay at least the federal minimum wage.
- Not in this table: the Department of Labor notes that some states set subminimum rates for minors or students or a training wage, and some cities and counties set minimum wages higher than the state rate. The Department advises checking with the state labor office for official information.
Estimate the deduction on your own figures
The tips deduction calculator takes your reported tip total and your income, applies the $25,000 limit and the phaseout, and returns an estimated deduction. It asks for nothing but the figures, and the calculation runs in your browser.
On the household route, run the estimate from the code TP figure on the W-2 the householder issues. On the self-employed route, run it with your own recorded tip total and keep the net income limit beside it (Tax Tip 2026-26). If a W-2 from either kind of employer shows no code TP, the missing codes page sets out the order of fixes.
Other tipped occupations on this site
- Bartender tips deduction, code 101
- Server tips deduction, codes 102 and 103
- Rideshare and delivery driver tips, codes 802 and 804
- Barber and stylist tips deduction, code 603
- Casino dealer tips deduction, code 201
- Golf caddie tips deduction, code 701
- Hotel staff tips deduction, codes 301 to 304
- Valet parking tips deduction, code 801
- All 71 Treasury Tipped Occupation Codes
Questions and answers
I clean for the same family every week and they pay me directly. Who is my employer for these rules?
It turns on control, not on the job title. The IRS states that household workers are the householder's employees if the householder can control not only the work they do but also how they do it, and names housekeepers, maids, and gardeners as household employees when they work in or around a private residence as employees. A householder who pays one household employee cash wages of $3,000 or more in 2026 generally must withhold and pay Social Security and Medicare tax and issue that employee a Form W-2 (IRS Topic No. 756). A cleaner who works for a cleaning company is that company's employee instead, and a cleaner running their own business with their own customers is self-employed.
I run my own plumbing business. Are my customers' tips treated like an employee's?
The deduction is the same; the reporting is different. The IRS states that repairmen, plumbers, and contractors who provide their services as independent contractors are not household employees (Topic No. 756). Your tips are business receipts on Schedule C, the reporting condition is met by the tips being reported on a Form 1099 form or on Form 4137, and the IRS caps a self-employed worker's tips deduction at the net income from the business in which the tips were received (Tax Tip 2026-26).
A homeowner tips our landscaping crew in cash. The crew works for a company. Who reports the tips?
Each crew member reports their own share to the company, under the same rule as any employee: cash tips of $20 or more in a calendar month are reported to the employer by the tenth day of the following month (Topic No. 761). The homeowner is not the employer in that arrangement; the company is, and the reported totals go into each worker's code TP.
Sources
- Treasury Decision 10044, April 13, 2026. The final regulations carrying the 71 Treasury Tipped Occupation Codes. Federal Register, Vol. 91, No. 70, pages 19026 to 19056; the list is Table 1 to paragraph (h) of 26 CFR 1.224-2.
- IRS, Topic No. 756, Employment Taxes for Household Employees. Household employees include housekeepers, maids, babysitters, gardeners, and others who perform household work in or around a private residence as an employee; a worker is an employee if the householder can control not only the work done but also how it is done; repairmen, plumbers, contractors and other business people who provide their services as independent contractors are not household employees; for 2026, cash wages of $3,000 or more to any one household employee trigger Social Security and Medicare tax, and the householder issues the Form W-2 and files Schedule H. Read in full November 4, 2026.
- IRS, Topic No. 761, Tips: withholding and reporting. Cash tips include tips received directly from customers, tips from other employees under any tip-sharing arrangement, and charged tips; the $20 a month reporting rule; service charges are non-tip wages, with the IRS's own examples. Read in full November 4, 2026.
- IRS, Tax Tip 2026-26, March 31, 2026, "Filing tips and updates for gig economy workers". Gig workers may deduct up to $25,000 in tips per return for 2025 through 2028; self-employed workers may deduct qualified tips up to the net income from the trades or businesses in which they were received; qualified tips must be reported on Form W-2, Form 1099-MISC, Form 1099-NEC or Form 1099-K, or reported directly by the taxpayer on Form 4137, to be eligible for the deduction; all gig income must be reported whether or not an information return arrives.
- Treasury Decision 10044, April 13, 2026, regulatory text of 26 CFR 1.224-2. Cash tips include tips received through a mandatory or voluntary tip-sharing arrangement such as a tip pool, and amounts paid in cash media including tokens readily exchangeable for a fixed amount in cash, with casino chips as the regulation's own example; a tip is an amount in excess of the amount agreed to, required, or charged for the services; amounts received by a manager or supervisor through a tip pool are not qualified tips. Read in full November 4, 2026.
- IRS, Fact Sheet FS-2026-13, August 6, 2026, and the IRS W-2 frequently asked questions. For 2026 the tips deduction is generally limited to the amount the employer separately reported in code TP, and amounts reported on a substitute Form 4852 cannot be used for it, while qualified tips reported on Form 4137 can. Note on source level: a fact sheet is IRS guidance, not binding legal authority.
- U.S. Department of Labor, Wage and Hour Division, "Minimum Wages for Tipped Employees". The state tipped minimum wage table on this page is transcribed from this source in full: document last revised July 1, 2026, retrieved November 4, 2026.
- Public Law 119-21, enacted July 4, 2025. Created this deduction in section 224 of the Internal Revenue Code, including its $25,000 limit and the phaseout in section 224(b)(2).
Last reviewed: November 4, 2026.