By Charles Pekow — Earn income as a bicycle courier or bike taxi driver? If your clients pay you anything above the agreed-upon fee, you won’t have to pay taxes on the difference. The Internal Revenue Service (IRS) issued final rules governing the no-taxes-on-tips legislation, which includes these categories of workers among those qualifying for the income exemption. The IRS limited the exemptions to occupations that traditionally receive tips, preventing people from reclassifying ordinary income as tips — you don’t tip your doctors, lawyers, or accountants.
A tip qualifies as tax-free if given voluntarily — a mandated service charge doesn’t count. Business owners and the self-employed don’t qualify. The income is only tax-free if the business and employee comply with all applicable laws, including licensing.
Customers can leave a qualifying tip by cash, credit or debit card, check, or even casino chips. But if a customer leaves you anything not readily converted to cash — tickets, services, free meals — you owe tax on the value.
Details at https://www.govinfo.gov/content/pkg/FR-2026-04-13/html/2026-07104.htm.
