Summary
The U.S. federal government is discussing a proposal to remove federal taxes on tips for certain workers. The initiative, part of Trump’s economic plan, aims to help workers by allowing them to deduct up to $25,000 of their tipped income each year from 2025 to 2028. The Treasury and IRS are inviting public comments on the proposal and have identified specific job categories that would be affected.
Key Facts
- The proposal is part of a bill called "One, Big, Beautiful Bill" signed into law by Trump.
- The proposed tax deduction allows eligible workers to deduct up to $25,000 in tips per year from 2025 to 2028.
- The deduction phases out for individuals earning over $150,000 and couples earning over $300,000.
- Roughly 4 million U.S. workers were in tipped occupations in 2023.
- The deduction is not available for married couples filing separately.
- Jobs affected include those in beverage and food service, entertainment, hospitality, home services, personal services, personal appearance and wellness, recreation, and transportation.
- The public can comment on the proposal through October 23.
- The Treasury and IRS provided a preliminary list of affected job categories.
