President Trump’s promise to “don’t tax tips” has raised important practical questions for the Internal Revenue Service. What is the exact definition of a tip? Who usually receives them? Are barefoot photos a form of pornography?
Maybe we should back off.
A sweeping tax cut passed this summer by Republicans created a new deduction for tips. Although the tax break doesn’t completely exempt tips from taxes, it still gives people an incentive to earn more. To prevent any economy-wide conversion of income into tips, the IRS and Treasury had to impose certain limits. Only people who work in jobs that “habitually and regularly” received tips can claim the deduction.
On the list of nearly 70 eligible professions, detailed in a draft rule in September, were “digital content creators,” “artists and entertainers” and “dancers,” categories that, at first glance, seemed like they could be a boon for American sex workers. But the Trump administration also added that tips for prostitution or “pornographic activities” would not qualify for this new tax break.
The exclusion was a disappointment for people who post sexually explicit, or even just sensual, content on platforms like OnlyFans, where users can leave tips. Performers in the adult entertainment sector already face difficulties accessing basic financial services. And the IRS rule seemed to be another example of the American public’s hostile attitude toward a type of work that, at least privately, is widely consumed. As of 2024, there were more than 4.6 million creator accounts on OnlyFans and more than 377 million fan accounts, according to public disclosures from the site’s parent company, although it is unclear how many of these accounts are based in the United States.
Tax experts also question how a restriction on “pornographic activities” would actually work. The IRS has not yet clarified what activities it would consider “pornographic.” It’s unclear, for example, whether strippers would qualify for the tip deduction. There are many activities that an accountant or tax attorney might consider merely exciting.
“Where is the line?” said Katherine Studley, an accountant who counts many OnlyFans creators among her clients. “Just because you’re on OnlyFans doesn’t mean it’s pornographic. You might have a cooking channel or a yoga channel.”
The distinction between pornography and other materials that happen to depict sex has long vexed the nation’s top legal scholars. Writing in 1964, Supreme Court Justice Potter Stewart declined to attempt to define the term, instead admitting, “I know it when I see it.” (To prepare for cases like this, back in the day, judges would actually review the art/pornography in question at the Supreme Court).
Indeed, defining even resolutely suitable terms can be complex. Consider the IRS definition of a citrus orchard, itself vaguely pruritic: “one or more trees of the rue family, often thorny and bearing large fruits with hard, usually thick skin and pulpy flesh, such as orange, grapefruit, lemon, lime, citron, tangelo, and mandarin.” »
Whether or not the IRS tries to come up with its own definition of “pornographic activity,” enforcing the exclusion would most likely still involve vetting taxpayers who report information from sources like OnlyFans. An IRS agent would have to view a taxpayer’s content, decide whether it is pornographic, then disallow the tip deduction, capped at $25,000.
“Ultimately, it would be the subjective decision of an IRS examiner or a Tax Court judge,” Thomas Gorczynski, tax preparer and educator. “Sometimes you look at something and it’s clearly pornography, but sometimes you look at something and you think, ‘Hey, that’s subjective. Someone might be really interested in that.'”
It was socially conservative and Christian groups that pushed the Trump administration to exclude this income from the new tip deduction. In September, several of them wrote a letter to Treasury Secretary Scott Bessent, arguing that “our government should not provide tax breaks to predatory industries that profit from the exploitation of young men and women, destroying marriages, families and lives.” The administration released the proposed restrictions a few days later.
John Shelton is the political director of Advancing American Freedom, the conservative group founded by former Vice President Mike Pence that helped write the letter. Mr. Shelton acknowledged that pornography is “a pretty embarrassing thing to talk about,” but said he felt it was part of an important cause.
“Some of these things end up being part of the skirmishes on the right around the Trump administration’s stance on conservative social issues,” he said.
Project 2025, the Heritage Foundation’s blueprint, called for banning pornography altogether, a move Washington Republicans don’t appear to be considering. (Mr. Trump himself was convicted last year of falsifying business records to cover up a 2016 payment to Stormy Daniels, a porn actress who said she had a sexual relationship with the president.)
Still, the possibility of a federal crackdown looms over players in the adult entertainment industry.
“This is the direction the government is moving,” said Jessica Goedtel, a financial planner who works with sex workers. “It could mean a total ban on pornography, it could mean something less than that, but it creates a lot of fear in my clients. The IRS could be used as a tool.”
The possibility of the IRS controlling pornography is just one example of the challenges of turning Mr. Trump’s four-word promise of “no tax on tips” into workable tax policy. After Treasury and the IRS released the list of occupations eligible for the deduction, many Americans submitted comments suggesting additions, including Santa entertainers, clergy, eyelash technicians, chiropractors and pet groomers.
Under the proposed regulations, Treasury and the IRS also said that mandatory service charges, common for large parties at restaurants, would not count as tips for purposes of the deduction. The rule could prevent workers of all types from turning part of their regular fees into deductible tips, but it would also frustrate restaurateurs who have stopped asking their staff to rely on tips. Other attempts to prevent abuse of the deduction have also caused confusion.
“If you’re trying to select a type of income that’s not very well defined for special tax treatment, it gets complicated,” said Annette Nellen, an accounting professor at San Jose State University. “Special rules are always complicated.”
For some OnlyFans creators, the question may ultimately be moot. Ms. Studley and Ms. Goedtel, the financial professionals, said they had clients who earned more than the income threshold to qualify for the tip deduction, which begins to decline for single Americans earning more than $150,000 and is completely inaccessible to people earning more than $400,000.
Macy Hilt creates what she describes as “completely explicit pornographic content” on her OnlyFans page. The 24-year-old said she makes about $2 million a year, with about 5 percent of that coming in tips. Even if this means she makes too much money for the tip deduction, she still finds the exclusion of income from “pornographic activity” discriminatory and, in all likelihood, unenforceable.
“I made a lot of money and got a lot of tips from a simple foot photo,” she said.
