Overview

The no tax on tips rules are new for 2025, and the IRS just released an update that matters for streamers, live hosts, and anyone who earns real tips from fans. The short version is that the IRS knows everyone is still building the systems to track and label tips the right way. So 2025 is being treated as a transition year for information reporting. That means some penalties are waived if forms do not yet show every new field the law requires. Here is what changed, what did not, and what you should do right now.

What The November IRS Update Said

The IRS issued Notice 2025-62. It gives penalty relief for the 2025 tax year if payers and platforms cannot yet provide the new tip details on W-2s and 1099s. The relief covers the penalties for filing a return with missing or incorrect tip fields, and for failing to furnish a correct payee statement. This applies only for 2025. The IRS also said more instructions are coming to help individuals claim the new tip deduction when they file 2025 returns.

One key reason for the relief is simple. Forms for 2025 will not be updated in time to include the new boxes for tips and occupations. The IRS called out that W-2 and 1099 layouts for 2025 will not carry the new entries, so they will not enforce the new reporting lines during the transition year if the rest of the form is complete and correct.

What Was Supposed To Be On Forms

The new law requires extra details on information returns. Payers and platforms are supposed to separately identify cash tips and list the worker’s occupation on W-2s or 1099s, and payment networks are supposed to show tip amounts on 1099-K forms when tips flow though their payments. Those items are not part of the code, but the IRS knows filers do not have a clean way to add them for 2025. That is why the penalty relief exists.

Even with the relief, the totals still have to be right. If tips were paid, the overall amounts still need to appear in the usual places on W-2s, 1099s, or 1099-Ks. The relief only covers the new separate tip fields and occupation labels that forms cannot capture yet. The base reporting rules still apply.

What Counts as a Tip for This Deduction

The update repeats core rule from the law. Tips must be voluntary payments from fans or customers and they must be reported somewhere official to claim the deduction. That can be on a W-2, a 1099, a 1099-K, or on Form 4137 if you self report tips. If there is no statement at all, the deduction is off the table. Plan your records with that in mind.

What This Means for Creators

You can still plan for a deduction in 2025. The IRS says individual guidance on how to claim it is coming. Keep your documentation clean so you can use it when you file.

Do not panic if your 2025 W-2 or 1099 is missing a new tip box. The IRS knows those boxes are not thee yet and will not penalize filers for missing the new fields during 2025, as long as the rest of the filing is correct.

Platforms and employers are encouraged to help anyway. Even though the new boxes are not required for 2025, the IRS encourages payers to give workers separate tip totals and occupation info through an online portal, a supplemental statement, or even box 14 on the W-2. If your platform offers an export with tip totals, save it.

What You Should Do Right Now

Label tip income in your books. Create a separate category for tips from Super Chats, Bits, gifts, and similar channels. If your dashboard shows tips by month, export the and save them somewhere you’ll remember them. The goal is a clear trail that shows voluntary tips distinct from subscriptions, ad share, brand deals, and affiliate income.

Collect statements even if they are imperfect. Save every W-2, 1099-NEC, and 1099-K you get for 2025. If there is a supplemental statement showing tips, keep that with the form. If there is no supplemental statement, your platform exports and your Form 4137 records fill the gap. The IRS made it clear that reported tips are the key to the deduction.

Keep occupation info handy. The new law ties reporting to occupations that customarily and regularly receive tips. If an employer or platform provides an occupation code or label, save that with your records. It will make filing easier when the guidance eases up.

What Has Not Changed

The update does not change who qualifies as a tipped employee or how you count voluntary tips. It does not rewrite the rules for subscriptions, ad splits, or sponsorships. Those are still outside the tip bucket. It also does not erase base reporting. The totals still need to be filed and furnished in the usual places. The relief only covers the new tip lines and occupation entries that forms cannot capture for 2025.

Checklist for Filing Season

• Save monthly exports that show tip totals by platform.
• Keep any supplemental statements from employers or platforms that show tips or occupation codes.
• File Form 4137 if you need to report tips yourself and keep a copy with your records.
• Keep W-2s, 1099-NEC, and 1099-K in one folder so you can reconcile totals.
• Watch for the IRS filing instructions for individuals on how to claim the tip deduction for 2025. The notice says they are coming.

Bottom Line

For 2025, the IRS is giving everyone a runway to get the no tax on tips reporting right. Forms will not show the new boxes yet. Penalties tied to those boxes are waived for this year as long as the rest of the statement is correct. Your job is to keep clean records, separate tips from other revenue, and hold on to any statements or exports that show tip totals. Do that, and when the final filing instructions arrive, you will be ready to claim what you are entitled to without worry of messing anything up.

If you want help organizing this, Beluga tags tip income by platform, keeps your exports in one place, and matches statements to your books so you are not guessing at tax time.

Keep on Creating!

— The Beluga Team