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WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS), under the Trump administration, on Friday released draft guidance on implementing President Donald Trump’s campaign promise of “no taxes on tips.” Sex workers, however, are explicitly excluded.
While some adult content creators had hoped to benefit, the “no tax for tips” provisions in the One Big Beautiful Bill Act, advanced by Republicans in Congress and the White House, do not apply to pornographic work or other forms of consensual sex work.
“The proposed regulations would provide that amounts received for services the performance of which is a felony or misdemeanor under applicable law are not qualified tips,” the draft regulation states. “In addition, the proposed regulations would provide that amounts received for prostitution services and pornographic activity are not qualified tips.” It further specifies that “any amount received for pornographic activity is not a qualified tip.”
Nate Mallory, a tax attorney who represents clients in the adult entertainment industry, had previously warned that lawmakers and regulators were unlikely to interpret the law broadly enough to include sex workers.
He added, “The exclusion of adult industry workers from tip tax benefits would raise serious constitutional concerns.
“Such selective application of tax benefits based on moral judgments about certain occupations could violate Equal Protection principles and would be counterintuitive to the core function of the Internal Revenue Service: to generate and collect tax revenue for the federal budget.”
Mallory concluded: “Tax policy should be based on economic principles, not moral judgments.”
Historical Context
The IRS has a long record of imposing strict tax rules on the adult entertainment industry. Performers and creators have been required to pay both income and self-employment taxes on all earnings, including tips, custom content, and income from subscription platforms. In past cases, courts have consistently upheld the IRS’s authority to tax sex workers even when their underlying activities were criminalized under state or federal law.
For example, strip club performers have successfully deducted work-related expenses — such as costumes, stage makeup, and even cosmetic surgery — but the IRS has never exempted them from paying taxes on income. Similarly, cam performers and independent adult content creators are treated as self-employed workers, responsible for tracking and reporting every dollar earned, regardless of whether it comes through platforms like OnlyFans, live chat services, or direct tips.
By explicitly excluding pornography and prostitution from the “no tax on tips” rule, the new proposal underscores the government’s longstanding approach: while the adult industry is expected to fully comply with tax obligations, its workers rarely receive the same benefits or protections extended to other sectors.
Legal experts say the draft guidance could face challenges, especially if courts view the exclusion as discriminatory or inconsistent with the principle that tax law should be neutral. For now, however, sex workers remain outside the scope of Trump’s “no tax on tips” promise.
