Casino Chip Tips Now Tax-Free: Treasury Makes Gaming Industry Tips Tax-Exempt

The Treasury Department has released new guidance, confirming that tips paid in casino chips are now eligible for the “no tax on tips” policy — the types of qualifying tips for deductibility have expanded. The new guidance expands qualifying payment options to include checks, credit and debit card payments, gift cards, electronic payments, and exchangeable tokens (including casino chips), rather than just cash tips.

The policy, originally introduced during the Trump administration and included in a recent Republican-backed bill, allows workers to deduct up to $25,000 of qualifying tips from their 2025 taxes. The deduction phases out for individuals earning more than $150,000 in modified adjusted gross income. This temporary measure is scheduled to expire at the end of 2028 unless extended by Congress.

A public hearing to review the policy's details and implications will be held in Washington on Oct. 23. The scope of eligible occupations remains unchanged, continuing to cover bartenders, wait staff, gambling booth cashiers, and dealers. Tip reporting rates vary among these roles, particularly in the gaming industry, where tip income can be substantial.

Tips reported under a Tip Rate Determination Agreement (TRDA) or Gaming Industry Tip Compliance Agreement (GITCA) will also qualify. These agreements allow employees to report tips based on a predetermined rate instead of accounting for each and every tip, which helps alleviate some of the burden that employees in high-volume establishments, like casinos, typically have when accounting for tips.

Due to the large number of casino workers in Nevada, they are likely to benefit the most from the modified policy. There are tens of thousands of employees in the state who are employed in the gaming industry and depend on tips for a bulk of their income; thus, the 'tips' from casino chips will have a large impact on how they file their taxes.

The guidance also clarifies exclusions. Certain payments, such as meals, event tickets, most digital assets, and automatic service charges — unless customers have the option to opt out — will not be classified as tips under this policy.

“Functionally, for employees, there is no distinction between auto-gratuity and a tip, and inclusion of this income as eligible will prevent arbitrary distinctions between tip practices that would disadvantage workers based solely on the business model of their employer,” the lawmakers wrote in their August letter.