The One, Big, Beautiful Bill passed by the U.S. House introduces a deduction from income for amounts that eligible taxpayers receive from tips. Tipped workers wouldn’t be required to itemize deductions to claim the deduction. However, they’d need a Social Security number to claim it. The deduction would expire after 2028. The Senate Finance Committee’s version of the bill has a similar no-tax-on-tips provision, with some changes. The Senate bill would cap the deduction at $25,000. And the deduction would begin to phase out when modified adjusted gross income exceeds $150,000. To be enacted, the bill must pass the full Senate before being sent back to the House for another vote.
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