Are water taxi and charter boat workers tips tax deductible in 2026?
Yes — water taxi and charter boat workers are on the IRS tipped occupation list (code 807). 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 807 · Transportation and delivery · official title: Water Taxi Operators and Charter Boat Workers
How tipping works in this job
Charter fishing and day-charter work has a well-established convention of tipping the mate at the dock, commonly a percentage of the charter price, and the mate’s income depends on it far more than on wages. Water taxi work is tipped like a cab, in small cash amounts on landing. Crew tips on a day charter are usually pooled between mate and deckhands.
The regulations say: Operate water taxi boats or provide services to passengers on private charter boats. May assist in navigational activities. Examples given: Water taxi captain, air boat operator, charter boat deckhand, charter boat steward.
The thing most likely to disqualify your tips
Fuel surcharges and fish-cleaning fees are charges, not tips. And on larger charters the contract sometimes specifies a crew gratuity percentage — once it is in the contract the client did not choose it, and it stops qualifying.
Check your own numbers
Pre-filled for water taxi and charter boat workers. Runs entirely in your browser — nothing is uploaded.
Step 1 — your occupation
Checking for Water taxi and charter boat workers (Treasury code 807). 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: Fuel surcharges and fish-cleaning fees are charges, not tips. And on larger charters the contract sometimes specifies a crew gratuity percentage — once it is in the contract the client did not choose it, and it stops qualifying.
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 water taxi and charter boat workers
Charter fishing runs on one of the most established tipping conventions in American service work, and it is the mate rather than the captain who depends on it. A day charter finishes at the dock with the party handing the mate a percentage of the charter price — commonly fifteen to twenty percent — for rigging, baiting, gaffing, handling fish and cleaning the catch. Mates are frequently paid a small day rate and make the rest of their living from that dockside moment.
Where a boat carries a mate and a deckhand, or a steward on a larger vessel, the dockside money is generally pooled and split by arrangement. Your qualifying figure is your share of that split. On a boat run by an owner-operator with no crew, the whole tip goes to one person and the analysis is simpler.
Water taxi work is a different rhythm again: short hops, small cash amounts on landing, tipped much like a cab in a harbour town. It is highly seasonal in most markets and heavily dependent on tourist traffic, so a summer week bears no relation to a February one.
Two things reliably confuse the picture. Fuel surcharges and fish-cleaning fees are charges the operation sets, and neither becomes a gratuity by being paid in cash at the dock. More importantly, larger charters — corporate days, multi-boat groups, luxury vessels — frequently specify a crew gratuity percentage in the charter agreement. Once it is a contract term the client agreed to a price rather than deciding what the day was worth, and that portion falls outside this deduction however it is distributed among the crew afterwards.
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 water taxi and charter boat workers on the IRS tipped occupation list?
- Yes. Water Taxi Operators and Charter Boat Workers is Treasury Tipped Occupation Code 807, in the transportation and delivery category. The regulations describe it as: Operate water taxi boats or provide services to passengers on private charter boats. May assist in navigational activities.
- What is the most common reason water taxi and charter boat workers lose the deduction?
- Fuel surcharges and fish-cleaning fees are charges, not tips. And on larger charters the contract sometimes specifies a crew gratuity percentage — once it is in the contract the client did not choose it, and it stops qualifying.
- 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.
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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.