President Trump’s campaign pledge to eliminate taxes on tips has thrust the Internal Revenue Service (IRS) into an uncomfortable position.
The agency must now determine what qualifies as a tip, which workers receive them, and whether certain online content crosses the line into pornography.
The sweeping tax legislation Republicans enacted this summer established a new deduction for tips.
Although the measure does not completely eliminate taxes on tips, it provides workers an incentive to earn more of their income this way.
To prevent widespread reclassification of regular wages as tips throughout the economy, the IRS and Treasury Department implemented restrictions.
Only individuals employed in positions that have “customarily and regularly” received tips qualify for the deduction.
The proposed regulation released in September listed nearly 70 qualifying occupations.
Among them were “digital content creators,” “entertainers and performers” and “dancers.”
These categories initially appeared to benefit workers in the adult entertainment sector. However, the Trump administration simultaneously announced that tips earned through prostitution or “pornographic activity” would be ineligible for the tax break.
This exclusion disappointed individuals who share sexually explicit or sensual material on platforms such as OnlyFans, where users can provide tips.
OnlyFans parent company disclosed that in 2024, the platform hosted over 4.6 million creator accounts and more than 377 million fan accounts, though the number of United States-based accounts remains uncertain.
Tax professionals question how a ban on “pornographic activity” would function in practice, especially since the IRS has not clarified which activities it deems “pornographic.”
The status of strippers remains ambiguous. Accountants and tax attorneys could potentially argue that considerable content is simply provocative rather than pornographic.
“Where’s the line?” asked Katherine Studley, an accountant whose clientele includes numerous OnlyFans creators, according to the New York Times.
“Just because you’re on OnlyFans, that doesn’t necessarily mean it’s pornographic. You could have a cooking channel or a yoga channel.”
Distinguishing pornography from other material depicting sexual activity has historically confounded the nation’s top legal authorities.
The Times reported that in a 1964 ruling, Supreme Court Justice Potter Stewart famously refused to define the term, instead acknowledging, “I know it when I see it.”
Justices at the time would actually view contested material at the Supreme Court when preparing for First Amendment cases.
Defining even straightforward terms proves challenging for the IRS.
The agency’s definition of a citrus grove reads: “one or more trees of the rue family, often thorny and bearing large fruit with hard, usually thick peel and pulpy flesh, such as the orange, grapefruit, lemon, lime, citron, tangelo, and tangerine.”
Regardless of whether the IRS develops its own “pornographic activity” definition, enforcement would likely require auditing taxpayers reporting tips from platforms like OnlyFans.
An IRS agent would need to review a taxpayer’s content, determine if it qualifies as pornographic, and potentially deny the deduction for tips, which caps at $25,000.
“Ultimately, it would be the subjective determination of an I.R.S. examiner or a Tax Court judge,” stated Thomas Gorczynski, a tax preparer and educator.
“Sometimes you look at something and it’s clearly pornography, but sometimes you look at something and you think, ‘Eh it’s subjective. Somebody might be really into it.’”
