Are self-enrichment teachers tips tax deductible in 2026?
Yes — self-enrichment teachers are on the IRS tipped occupation list (code 702). Tips in this job are deductible for 2026, up to $25,000, if the customer chose the amount and could have declined.
Treasury Tipped Occupation Code 702 · Recreation and instruction · official title: Self-Enrichment Teachers
How tipping works in this job
Private music and dance teachers are tipped at the end of a term, at the holidays, or after a recital, typically by parents. Class-based instructors at community centres and craft studios are tipped rarely. The relationship is usually long-running, and tipping follows the school year rather than the lesson.
The regulations say: Teach or instruct individuals or groups for the primary purpose of self-enrichment, rather than for an occupational objective, educational attainment, competition, or fitness. Examples given: Knitting instructor, piano teacher, art instructor, dance teacher.
The thing most likely to disqualify your tips
The eligibility line in this code is about purpose, not subject. Teaching piano for enjoyment is self-enrichment; coaching a student through a graded exam for a qualification, or teaching towards an occupational objective, is not covered by this code. If you do both, only the enrichment side supports a qualifying tip.
Check your own numbers
Pre-filled for self-enrichment teachers. Runs entirely in your browser — nothing is uploaded.
Step 1 — your occupation
Checking for Self-enrichment teachers (Treasury code 702). This occupation is on the list.
Step 2 — is it actually a tip?
Answer for the money you are asking about. If some of your income is tips and some is service charges, run them separately.
Step 3 — your tips and income
The phase-out runs on modified AGI, which for most people is the same as AGI.
3 questions left to answer.
OBBBA Deductions · obbbadeductions.com
Tips deduction worksheet — tax year 2026
The three tests, as answered
- Does the customer decide the amount? not answered
- Can the customer decline to pay it? not answered
- Is it a mandatory service charge or auto-gratuity? not answered
Answer the 3 remaining questions above for a result.
Watch out for this in your job: The eligibility line in this code is about purpose, not subject. Teaching piano for enjoyment is self-enrichment; coaching a student through a graded exam for a qualification, or teaching towards an occupational objective, is not covered by this code. If you do both, only the enrichment side supports a qualifying tip.
Educational estimate only, not tax advice. It runs entirely in your browser and nothing you type is sent anywhere. The deduction is scheduled to expire after tax year 2028.
How this applies to self-enrichment teachers
The eligibility line in this code is drawn by purpose, not by subject, and it is the thing to get straight before anything else. Code 702 covers teaching for self-enrichment — for enjoyment, curiosity or personal satisfaction — expressly as opposed to teaching towards an occupational objective, an educational qualification, competition or fitness. The same instructor teaching the same instrument can be inside the code on Tuesday and outside it on Wednesday depending on why the student is there.
In practice that distinction sorts most private music and craft teaching into the code cleanly. A child learning piano because their family wants them to play, an adult taking up watercolours, a knitting class at a yarn shop, a social dance course — all self-enrichment. A student being prepared for a graded examination, a conservatory audition or a professional qualification is being taught towards attainment, and that work is not what this code describes.
Tipping follows the academic calendar rather than the lesson. Envelopes appear at the end of a term, after a recital, at the holidays, and when a student finishes with you. They come from parents in the case of children and are almost always cash or a transfer. Nobody tips per lesson, so a rate-per-session mental model will produce a wildly wrong annual estimate.
Studio and school arrangements complicate the picture. Where you teach through a music school that collects fees and pays you a share, that share is compensation for teaching. Where parents pay you directly, the fee is your business income and anything extra is the gratuity. Teachers running their own studios should remember the trade-or-business limit — room hire, instruments, sheet music and insurance come off before tips are taken into account.
The three tests, whatever your job
Paid voluntarily
The customer sets the amount and can decline to pay it.
Paid in cash or a cash equivalent
Card payments and mobile payments count.
Received directly or through a tip pool
Both routes qualify.
Questions
- Are self-enrichment teachers on the IRS tipped occupation list?
- Yes. Self-Enrichment Teachers is Treasury Tipped Occupation Code 702, in the recreation and instruction category. The regulations describe it as: Teach or instruct individuals or groups for the primary purpose of self-enrichment, rather than for an occupational objective, educational attainment, competition, or fitness.
- What is the most common reason self-enrichment teachers lose the deduction?
- The eligibility line in this code is about purpose, not subject. Teaching piano for enjoyment is self-enrichment; coaching a student through a graded exam for a qualification, or teaching towards an occupational objective, is not covered by this code. If you do both, only the enrichment side supports a qualifying tip.
- How much of my tips can I deduct?
- Up to $25,000 per return, whatever your filing status. The cap applies first, then the amount is reduced by $100 for every $1,000 of modified adjusted gross income above the threshold for your filing status.
- Does a mandatory service charge count as a tip?
- No. A mandatory service charge or automatic gratuity is not a qualifying tip, and the final regulations confirmed this explicitly. It does not qualify even when the customer cannot decline it — a qualifying tip has to be an amount the customer chose to give.
Related occupations in recreation and instruction
- 703
Recreational and tour pilots
You fly sightseeing, recreational or jump flights — helicopters, light aircraft, balloons.
- 704
Tour guides
You guide people around sights, museums, buildings and places of interest.
- 705
Travel guides
You plan and lead multi-day travel — expeditions, river trips, cruises and long tours.
Occupation data transcribed from T.D. 10044 — final regulations on occupations that customarily and regularly received tips, Treas. Reg. § 1.224-1(h) table 1, last verified 2026-09-08. Read the regulations.