{"id":76465,"date":"2026-02-09T08:00:00","date_gmt":"2026-02-09T14:00:00","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=76465"},"modified":"2026-02-03T13:12:59","modified_gmt":"2026-02-03T19:12:59","slug":"no-tax-on-tips-the-zelle-problem-we-didnt-see-coming","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/no-tax-on-tips-the-zelle-problem-we-didnt-see-coming\/","title":{"rendered":"No tax on tips: The Zelle problem we didn’t see coming"},"content":{"rendered":"\n

Let\u2019s keep the conversation going on No Tax on Tips<\/a><\/strong>, because this is where we have tax advisory<\/a>.<\/p>\n\n\n\n

We now have Notice 2025-69<\/strong><\/a>, which gave us a very important clarification: Only tips that are included on Form 1099-NEC, 1099-MISC, or 1099-K count toward the tip deduction.<\/strong><\/p>\n\n\n\n

This matters. A lot.<\/p>\n\n\n\n

This became very real for me during a conversation with my hairstylist, and it\u2019s a situation many of our clients may already be in.<\/p>\n\n\n\n

I have always paid my hairstylist through Zelle. We both liked it because Zelle avoids credit card processing fees. It’s simple, clean, and cheaper for her.<\/p>\n\n\n\n

Back in May, when the talk<\/em> of \u201cno tax on tips<\/strong>\u201d was circulating, but before anything officially passed, I told her the good news. She was excited because mostly every client tips. Trust me, business owners know exactly which clients don\u2019t tip!<\/p>\n\n\n\n

Then the law passed<\/a>.<\/p>\n\n\n\n

Section 224<\/strong><\/a> stated the requirements for qualified tips<\/strong>, and from what I read, my hairstylist checked every box:<\/p>\n\n\n\n