IRS Transportation & Delivery (TTOC)
Do valets qualify for the No Tax on Tips deduction?
Valets are on the IRS Treasury Tipped Occupation Code list and remain one of the most cash-heavy tipped trades in the country. What matters for §224 is separating the parking fee (which goes to the hotel/restaurant/venue as revenue) from the tip (which is yours). Most valets never see the parking fee — it is collected by the venue. What lands in your pocket is the tip, and that is what qualifies.
Short answer
Yes. Valets are on the IRS TTOC list. Voluntary tips from customers dropping off or picking up their vehicle qualify for the federal No Tax on Tips deduction — up to $25,000 per year. Parking fees paid to the venue are not tips. Auto-gratuities on 'event valet' packages or contracted corporate arrangements are mandatory service charges and do not qualify.
How much could you save?
Typical tip income for valets.
Full-time valets typically report $8,000-$18,000 in annual tip income. Luxury hotel valets and high-turnover restaurant valets often hit the top of that range. Convention-center and event valets see spikier income tied to booking schedules. Tips remain 80-90% cash in this trade.
For valets specifically
What counts as a qualified tip — and what doesn't.
✓ Qualifies
- Voluntary cash tips at drop-off
- Voluntary cash tips at pickup (typical $3-10 per vehicle)
- Voluntary card tips through mobile valet apps (SpotHero, VenueGo) when the guest opts to tip
- Voluntary tips on 'extra service' moments (rain, luggage assistance, jump-starts)
✗ Does not qualify
- Parking fees charged to the customer (that goes to the venue as revenue)
- Any 'gratuity included' or 'event package gratuity' on corporate/wedding contracts
- 'Ticket fee' or 'validation fee' the venue charges
- Your share of a mandatory service charge distributed by the venue
- Fuel/EV-charging tips when the venue treats them as a mandatory fee
A worked example
Marco, a real-world valet.
Marco is a full-time hotel valet at a downtown luxury property, W-2, single filer, MAGI $34,000. For the tax year, she logged $14,200 in qualified tips (mostly cash). She sits in the 12% federal marginal bracket.
- Deduction allowed: Full $14,200 deduction (under cap and MAGI threshold)
- Estimated savings: About $1,704 off federal income tax
This is an illustrative example, not a guarantee. Your actual savings depend on your filing status, total income, state, and other deductions.
Questions specific to valets
What other valets ask.
The parking fee is $30. Is any of that mine?
No. The parking fee is the venue's service revenue. What is yours is the voluntary tip the customer hands you on top of the fee — typically $3-10 per vehicle. Log only the tip amount, not the parking fee.
The venue calls the 15% event-valet gratuity a 'tip pool.' Does that count?
No. Event-valet gratuities baked into a wedding or corporate contract are mandatory service charges. The label 'tip pool' does not change the source: if the client had no way to remove or reduce the charge, it is mandatory, and §224 excludes it. Only voluntary tips from individual guests on top of the event contract qualify.
What if I split tips 50/50 with a partner?
Your share is what qualifies. Log the amount you actually took home after the split — not the gross. Two valets each reporting the same gross tip is a red flag; each should report only their own portion.
Do jumper-cable or dead-battery service tips count?
Yes, if voluntary. A guest who tips you $20 for a jump-start on top of the parking transaction is leaving a voluntary tip — that qualifies. If the venue charges a "vehicle service fee" for the jump and distributes a portion to you, that portion is a service charge and does not qualify.
Related occupations
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Track every shift
The deduction is real money — if you can prove your tips.
Qualified Tips logs each shift the moment it ends — timestamped, exportable, IRS-aligned.