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No tax on tips
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No tax on tips
No tax on tips is an American proposal to not tax income earned from tips. During the 2024 United States presidential election, both main candidates supported legislation to remove federal taxes from tips.
On May 20, 2025, The United States Senate passed the bipartisan No Tax on Tips Act proposed bill by unanimous consent. A version of the bill was included in the One Big Beautiful Bill Act and signed into law on July 4, 2025.
At the federal level, several bills have been proposed to reduce or eliminate taxes on tips. The proposal is also being considered in at least 20 states.
The proposal was supported by both Donald Trump and Kamala Harris in the 2024 United States presidential election. The National Restaurant Association has also expressed support for the proposal.
The proposal gives priority to tipped workers and leaves out the vast majority of Americans who are not in tipped occupations.
Some tipped workers have incomes so low that they do not owe federal income tax. If customer perceived workers take home a greater share of their tips, they could tip less.
The focus on taxes on tips could also distract from raising the tipped and untipped minimum wages and reduce pressure on employers to raise wages.
The proposal could lead more industries to rely more on tipping which is widely unpopular.
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No tax on tips
No tax on tips is an American proposal to not tax income earned from tips. During the 2024 United States presidential election, both main candidates supported legislation to remove federal taxes from tips.
On May 20, 2025, The United States Senate passed the bipartisan No Tax on Tips Act proposed bill by unanimous consent. A version of the bill was included in the One Big Beautiful Bill Act and signed into law on July 4, 2025.
At the federal level, several bills have been proposed to reduce or eliminate taxes on tips. The proposal is also being considered in at least 20 states.
The proposal was supported by both Donald Trump and Kamala Harris in the 2024 United States presidential election. The National Restaurant Association has also expressed support for the proposal.
The proposal gives priority to tipped workers and leaves out the vast majority of Americans who are not in tipped occupations.
Some tipped workers have incomes so low that they do not owe federal income tax. If customer perceived workers take home a greater share of their tips, they could tip less.
The focus on taxes on tips could also distract from raising the tipped and untipped minimum wages and reduce pressure on employers to raise wages.
The proposal could lead more industries to rely more on tipping which is widely unpopular.