If enacted, workers could deduct all “qualified tips” from 2025 through 2028. Tips must be reported to qualify for the deduction.
In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
“This is a very narrow subset of the workforce,” said Alex Muresianu, senior policy analyst at the Tax Foundation.
“For the lowest income tipped workers, it provides no marginal benefit” Muresianu said. “It would benefit moderate to middle income workers substantially.”
also from another article:
limited to cash tips that workers report to employers for withholding purposes on payroll taxes.
For a 14 year old masseuse who works at a golf course getting a “tip” to stay quiet…
Well, they’ll get less from the person tipping them than they used to, but value it as more because they don’t pay taxes now.
Rich people are going to tip less, and get treated better for it. That’s the savings they’ve always meant, they’ll be able to tip less and still get the treatment they want.
also from another article:
So many caveats it’s practically worthless.
For normal workers who make tips…
For a 14 year old masseuse who works at a golf course getting a “tip” to stay quiet…
Well, they’ll get less from the person tipping them than they used to, but value it as more because they don’t pay taxes now.
Rich people are going to tip less, and get treated better for it. That’s the savings they’ve always meant, they’ll be able to tip less and still get the treatment they want.
It’s also apparently tied to banning states from enacting AI regulations.