Tipped occupations ยท Recreation and Instruction
Golf Caddie Tips and the 2026 Tips Deduction: Code 701
Golf caddies appear on the Treasury list behind the 2026 tips deduction as occupation code 701, in the Recreation and Instruction category of the final regulations (T.D. 10044). The regulation describes the work as assisting a golfer during a round of golf with practical support and strategic advice, carrying the bag, managing the clubs, and advising on club selection and course strategy, and its own examples for the code are 'golf caddie' and 'golf cart attendant'. A caddie's pay usually comes in two parts: a fee for the round, set by the club or agreed in advance, and whatever the golfer adds on top of it. The regulations define a tip as an amount paid in excess of the amount agreed to, required, or charged for the services, which is precisely the line between those two parts of a caddie's pay.
Last reviewed: November 4, 2026.
The facts, in one table
| Treasury Tipped Occupation Code | 701, Golf Caddies |
|---|---|
| Category in the final regulations | Recreation and Instruction |
| Related codes in the same category | 702, Self-Enrichment Teachers; 704, Tour Guides; 705, Travel Guides; 706, Sports and Recreation Instructors |
| Also inside code 701 | Golf cart attendants. The final regulations give 'golf caddie, golf cart attendant' as the examples for this code (T.D. 10044, Table 1) |
| The deduction | Up to $25,000 of qualified tips per return, for tax years 2025 through 2028, claimed on Schedule 1-A whether or not you itemize |
| Phaseout | The amount after the $25,000 limit is reduced by $100 for each $1,000 of modified adjusted gross income over $150,000, or $300,000 on a joint return, counting whole $1,000 steps only (section 224(b)(2) of the Internal Revenue Code; 26 CFR 1.224-1(b)(2)) |
| Where the figure appears | Employed by the club: Box 12 of your W-2, code TP, with code 701 in Box 14b, and for 2026 the deduction is generally limited to the amount the employer separately reported. Self-employed: the tips are business income on Schedule C, and the IRS states qualified tips must be reported on a Form 1099 form or on Form 4137 to be eligible for the deduction (Tax Tip 2026-26) |
| Payroll and self-employment tax | Unchanged by the deduction. Tips are taxed for Social Security and Medicare in full, as wages for an employed caddie and as self-employment income for an independent one; the deduction reduces income tax only |
Read the code the way the site reads the whole list: appearing on the Treasury list is a published fact about an occupation. It is not a decision about any one worker, and the rest of the rules on this page, the reporting rule in particular, decide what a deduction is built from. The full list of 71 codes is on the Treasury Tipped Occupation Codes page.
the set fee is not the tip
Two ways to carry a bag, two ways the tips are reported
Employed by the club. Where the club employs its caddies, the standard employee route applies: cash tips of $20 or more in a calendar month are reported to the club by the tenth day of the following month (IRS Topic No. 761), and the reported total is what the club prints in Box 12 code TP, with code 701 in Box 14b. If the code is missing from a January W-2, the missing codes page sets out the order of fixes; only the club can correct the form, on Form W-2c.
Working independently. Many caddies are engaged per round, by the club, by the golfer, or through a caddie service, without being employees. There is then no employer and no code TP: fees and tips together are business income, reported on Schedule C. Two consequences follow. Your own records have to separate the tip from the fee, round by round, because no statement will do it for you and the deduction covers the tip part only. And the IRS applies a second limit to the self-employed: the deduction cannot exceed the net income from the business in which the tips were received (Tax Tip 2026-26). The 1099 tax calculator and the quarterly estimated tax calculator are this site's tools for that side of the system, and the self-employment tax explainer walks through how that tax is figured.
What counts as a qualified tip for a caddie
A qualified tip is a voluntary payment, in an amount the customer decides, received in an occupation on the Treasury list. Sorted by the IRS definitions, the parts of a caddie's pay sort out like this:
- What the golfer hands you, or adds, beyond the round's fee: the tip. The regulations define tips as amounts in excess of the amount agreed to, required, charged, or otherwise reasonably expected to be paid for the services (26 CFR 1.224-2), and a caddie's fee is exactly that agreed or charged amount.
- The set caddie fee itself, at the club's rate: the price of the service, not a tip, whether the golfer pays it to you directly or the club collects it and passes it on. It is still income, and still taxed; it simply is not a qualified tip.
- A tip run through the club's charging system or paid by card and passed to you: a charged tip, and charged tips are cash tips in the IRS definition (Topic No. 761).
- A tip sent through a payment app, in an amount the golfer chooses: the regulations include amounts paid through a mobile payment application denominated in cash in the definition of cash tips, so it stands on the same footing as cash.
- Your share of a group tip or a caddie pool after an outing or a tournament: tips received under a tip-sharing arrangement are cash tips in the same definition, for the caddie who receives the share.
cart attendants sit in the same code
The wage under the tips
The tipped minimum wage table below binds employers, and a caddie engaged as an independent contractor is not owed an hourly wage by anyone, so for the independent route it is background rather than a pay rule. A caddie the club employs is covered by it, and the state's row is the floor under that caddie's cash wage. It is printed in full, as the Department of Labor publishes it, because caddies work on both sides of that line and the figures are looked up from both sides.
| Minimum wage the combined pay must reach | $7.25 an hour |
|---|---|
| Lowest cash wage an employer may pay a tipped employee | $2.13 an hour |
| Maximum tip credit | $5.12 an hour |
| Tipped employee, federal definition | A worker in an occupation that customarily and regularly receives more than $30 a month in tips |
The tip credit is a credit toward the minimum wage, not a discount on it: the employer may count up to $5.12 an hour of a tipped employee's tips toward the $7.25, and if cash wages plus tips do not reach the full minimum wage, the employer owes the difference. States set their own floors on top of the federal one, and the full state table, exactly as the U.S. Department of Labor publishes it, follows. Source: U.S. Department of Labor, Wage and Hour Division, "Minimum Wages for Tipped Employees", last revised July 1, 2026, retrieved November 4, 2026.
States that require the full state minimum wage before tips
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Alaska | $14.00 | |||
| California | $16.90 | |||
| Guam | $9.25 | |||
| Minnesota | $11.41 | |||
| Montana: business with gross annual sales over $110,000 | $10.85 | |||
| Montana: business not covered by the Fair Labor Standards Act, with gross annual sales of $110,000 or less | $4.00 | |||
| Nevada | $12.00 | |||
| Oregon | $15.55 (standard statewide); $16.80 (Portland metro); $14.55 (nonurban counties) | |||
| Washington | $17.13 |
States that require a minimum cash wage above the federal $2.13 an hour
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Arizona | $15.15 | $3.00 | $12.15 | Not specified |
| Arkansas | $11.00 | $8.37 | $2.63 | Not specified |
| Colorado | $15.16 | $3.02 | $12.14 | More than $30 |
| Connecticut: hotel and restaurant workers | $16.94 | $10.56 | $6.38 | Not specified |
| Connecticut: bartenders who customarily receive tips | $16.94 | $8.71 | $8.23 | |
| Delaware | $15.00 | $12.77 | $2.23 | More than $30 |
| District of Columbia | $18.40 | $8.10 | $10.30 | Not specified |
| Florida | $14.00 | $3.02 | $10.98 | More than $30 |
| Hawaii | $16.00 | $1.25 | $14.75 | |
| Idaho | $7.25 | $3.90 | $3.35 | More than $30 |
| Illinois | $15.00 | 40 percent of the applicable minimum wage ($6.00) | $9.00 | Not specified |
| Iowa | $7.25 | 40 percent of the applicable minimum wage ($2.90) | $4.35 | More than $30 |
| Maine | $15.10 | 50 percent of the applicable minimum wage ($7.55) | $7.55 | More than $191 |
| Maryland | $15.00 | $11.37 | $3.63 | More than $30 |
| Massachusetts | $15.00 | $8.25 | $6.75 | More than $20 |
| Michigan | $13.73 | $8.24 | $5.49 | Not specified |
| Missouri | $15.00 | 50 percent of the applicable minimum wage ($7.50) | $7.50 | Not specified |
| New Hampshire | $7.25 | $3.98 | $3.27 | More than $30 |
| New Jersey | $15.92 | $9.87 | $6.05 | More than $30 |
| New Mexico | $12.00 | $9.00 | $3.00 | More than $30 |
| New York | $17.00 (New York City, Long Island and Westchester); $16.00 (remainder of the state) | Varies by region and type of employer | Varies by region and type of employer | Not specified |
| North Dakota | $7.25 | 33 percent of the applicable minimum wage ($2.39) | $4.86 | More than $30 |
| Ohio: employers with annual gross receipts of $405,000 or more | $11.00 | $5.50 | $5.50 | More than $30 |
| Oklahoma | $7.25 | $5.12 | $2.13 | Not specified |
| Pennsylvania | $7.25 | $4.42 | $2.83 | $135 |
| Rhode Island | $16.00 | $12.11 | $3.89 | More than $30 |
| South Dakota | $11.85 | 50 percent of the applicable minimum wage ($5.92) | $5.93 | More than $35 |
| Vermont | $14.42 | 50 percent of the applicable minimum wage ($7.21) | $7.21 | More than $120 |
| Virgin Islands | $10.50 | $6.30 | 40 percent of the applicable minimum wage ($4.20) | Not specified |
| Wisconsin | $7.25 | $4.92 | $2.33 | Not specified |
| West Virginia | $8.75 | 70 percent of the applicable minimum wage ($6.13) | $2.62 | Not specified |
States where the minimum cash wage is the federal $2.13 an hour
| Jurisdiction | Basic combined cash and tip minimum wage | Maximum tip credit | Minimum cash wage | Tipped employee: tips received per month |
|---|---|---|---|---|
| Alabama | $7.25 | $5.12 | $2.13 | More than $30 |
| American Samoa | Special minimum wage rates apply | $2.13 | More than $30 | |
| Georgia | $7.25 | $5.12 | $2.13 | More than $30 |
| Indiana | $7.25 | $5.12 | $2.13 | More than $30 |
| Kansas | $7.25 | $5.12 | $2.13 | Not specified |
| Kentucky | $7.25 | $5.12 | $2.13 | More than $30 |
| Louisiana | $7.25 | $5.12 | $2.13 | More than $30 |
| Mississippi | $7.25 | $5.12 | $2.13 | More than $30 |
| Nebraska | $15.00 | $12.87 | $2.13 | Not specified |
| North Carolina | $7.25 | $5.12 | $2.13 | More than $20 |
| Northern Mariana Islands | $7.25 | $5.12 | $2.13 | More than $30 |
| Puerto Rico | $10.50 | $8.37 | $2.13 | More than $30 |
| South Carolina | $7.25 | $5.12 | $2.13 | More than $30 |
| Tennessee | $7.25 | $5.12 | $2.13 | More than $30 |
| Texas | $7.25 | $5.12 | $2.13 | More than $20 |
| Utah | $7.25 | $5.12 | $2.13 | More than $30 |
| Virginia | $12.77 | $10.64 | $2.13 | More than $30 |
| Wyoming | $7.25 | $5.12 | $2.13 | More than $30 |
- Florida: the figures above are the ones in the July 1, 2026 revision. The Department of Labor's own footnote to this table states that the Florida minimum wage is scheduled to increase by $1.00 every year on September 30 until reaching $15.00 on September 30, 2026.
- Hawaii: the tip credit is permissible only if the combined amount the employee receives from the employer and in tips is at least $7.00 more than the applicable minimum wage.
- Michigan: the Department of Labor's footnote states that the Michigan tipped cash wage is scheduled to increase annually until it reaches 50 percent of the state minimum wage in 2031, and that the Michigan minimum wage is scheduled to increase to $15.00 on January 1, 2027.
- District of Columbia: employers must currently pay a minimum cash wage of at least 56 percent of the standard minimum wage.
- No state minimum wage law: Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no state minimum wage law, and Georgia's law does not apply to tipped employees; employers covered by the Fair Labor Standards Act in those states pay at least the federal minimum wage.
- Not in this table: the Department of Labor notes that some states set subminimum rates for minors or students or a training wage, and some cities and counties set minimum wages higher than the state rate. The Department advises checking with the state labor office for official information.
Estimate the deduction on your own figures
The tips deduction calculator takes your reported tip total and your income, applies the $25,000 limit and the phaseout, and returns an estimated deduction. It asks for nothing but the figures, and the calculation runs in your browser.
If you work independently, run the estimate with your own recorded tip total, the part of each round's pay above the fee, and keep the self-employed limit beside it: the deduction cannot exceed the net income from the caddie business itself (Tax Tip 2026-26).
Other tipped occupations on this site
- Bartender tips deduction, code 101
- Server tips deduction, codes 102 and 103
- Rideshare and delivery driver tips, codes 802 and 804
- Barber and stylist tips deduction, code 603
- Casino dealer tips deduction, code 201
- Home services tips deduction, codes 401 to 409
- Hotel staff tips deduction, codes 301 to 304
- Valet parking tips deduction, code 801
- All 71 Treasury Tipped Occupation Codes
Questions and answers
The club sets the fee and the golfer adds a tip on top. Which part is the deduction about?
The added part. The regulations define a tip as an amount in excess of the amount agreed to, required, or charged for the services (26 CFR 1.224-2). The set fee is the charged amount for the round, so it is the price of the service. What the golfer pays beyond it, voluntarily and in an amount the golfer decides, is the tip.
I work the carts at the club rather than carrying bags. Is that work on the list?
The final regulations give two examples for code 701: 'golf caddie' and 'golf cart attendant' (T.D. 10044, Table 1). Appearing in the regulation's own examples is the published fact; the rest of the rules on this page, reporting in particular, decide what a deduction is built from.
I am paid per round and get no W-2. Can the deduction still apply to my tips?
It is the same deduction, with two differences in mechanics. Your fees and tips are business income on Schedule C rather than W-2 wages, so there is no code TP figure; the IRS reporting condition is met by the tips being reported on a Form 1099 form or on Form 4137. And the IRS caps a self-employed worker's tips deduction at the net income from the business in which the tips were received (Tax Tip 2026-26).
Sources
- Treasury Decision 10044, April 13, 2026. The final regulations carrying the 71 Treasury Tipped Occupation Codes. Federal Register, Vol. 91, No. 70, pages 19026 to 19056; the list is Table 1 to paragraph (h) of 26 CFR 1.224-2.
- Treasury Decision 10044, April 13, 2026, regulatory text of 26 CFR 1.224-2. Cash tips include tips received through a mandatory or voluntary tip-sharing arrangement such as a tip pool, and amounts paid in cash media including tokens readily exchangeable for a fixed amount in cash, with casino chips as the regulation's own example; a tip is an amount in excess of the amount agreed to, required, or charged for the services; amounts received by a manager or supervisor through a tip pool are not qualified tips. Read in full November 4, 2026.
- IRS, Topic No. 761, Tips: withholding and reporting. Cash tips include tips received directly from customers, tips from other employees under any tip-sharing arrangement, and charged tips; the $20 a month reporting rule; service charges are non-tip wages, with the IRS's own examples. Read in full November 4, 2026.
- IRS, Tax Tip 2026-26, March 31, 2026, "Filing tips and updates for gig economy workers". Gig workers may deduct up to $25,000 in tips per return for 2025 through 2028; self-employed workers may deduct qualified tips up to the net income from the trades or businesses in which they were received; qualified tips must be reported on Form W-2, Form 1099-MISC, Form 1099-NEC or Form 1099-K, or reported directly by the taxpayer on Form 4137, to be eligible for the deduction; all gig income must be reported whether or not an information return arrives.
- IRS, Fact Sheet FS-2026-13, August 6, 2026, and the IRS W-2 frequently asked questions. For 2026 the tips deduction is generally limited to the amount the employer separately reported in code TP, and amounts reported on a substitute Form 4852 cannot be used for it, while qualified tips reported on Form 4137 can. Note on source level: a fact sheet is IRS guidance, not binding legal authority.
- IRS, Instructions for Forms W-2 and W-3, tax year 2026. Final version, posted January 30, 2026. Carries Box 12 code TP and Box 14b.
- U.S. Department of Labor, Wage and Hour Division, "Minimum Wages for Tipped Employees". The state tipped minimum wage table on this page is transcribed from this source in full: document last revised July 1, 2026, retrieved November 4, 2026.
- Public Law 119-21, enacted July 4, 2025. Created this deduction in section 224 of the Internal Revenue Code, including its $25,000 limit and the phaseout in section 224(b)(2).
Last reviewed: November 4, 2026.