What Trump’s ‘no tax on tips’ means for tipped workers

Maddy Lopez, a bartender in Los Angeles, spent 25 years working in the restaurant industry, where tips can constitute an important part of a worker’s income.

When President Donald hears Trump’s “Great Beautiful Bill” Includes a section “There is no tax for tips,” he said: “It’s too good to be real.”

In his experience, Lopez said that tax cuts usually contain a “capture” and that the benefit is not sure that some workers will be as generous as expected.

Experts are a reasonable question: some important details of the provision – which professions and tip types can be entitled – it is still unclear. There are some turmoil among workers about how tax reduction works.

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T. Cooper, a hair and make -up stylist in New York, said that the measure is “misperceived” among the tip workers recognized by the measure.

“Many people don’t understand that you’ll have to pay taxes for clues,” he said.

Both Republicans and Democrats During the 2024 presidential campaign, he swam the idea that “there is no tax for clues”.

In addition, Ben Henry-Moreland, a certified financial planner with a consultant platform, will owe the payroll taxes for medicare and social security with clue income. Kitces.comDSÖ He analyzed the legislation.

Experts, such as W-2 or 1099 forms of information from your employer must appear clues. However, the reporting rules for the agency’s clue income remain uncertain. For example, questions about how employers should report tips on W-2 or 1099 forms to be entitled to interruption.

Currently workers Making $ 20 or more According to IRS, they should notify employers. Tips may include the cash paid directly by customers, payments made from clue sharing structures between employees and credit card payments.

According to the agency, IRS is expected to clarify which professions are entitled to tax reductions in early October.

According to the provisions, “qualified tips” include the cash or tip paid by the credit card and the gains obtained from a sharing regulation.

However, he also says that tips should be paid voluntarily by the customer. Experts, these experts, according to the experts in question, the restaurants impose automatic service fees imposed on larger parties.

In addition to the confusion of reporting, it is not unusual for such compulsory gratitude to be mixed with other clues and only to appear as clues in tax forms, but the bartender, Lopez, said his experience.

In some industries, overturning Consumer sense is reduced. In the second quarter of 2025, the average tip between restaurants, cafes and bars was 14.99% of 15.17% of the previous quarter. new Report by Square, a technology services company.

“As the confidence in the consumer economy changes and clues fall, the workers take less home.”

Some consumers are experiencing “overturning fatigue”. According to Bankrate, approximately 41% of the Americans, in 2025 last year, “overturning out of control” he said. report.

Some workers say that higher service costs and consumer expenditures contribute to these overturning trends.

Cooper, in the hair industry, materials, rent and services increases the cost of prices increased every year, he said.

“So people have no problem with overturning,” he said. “In general, the service has become more expensive.”

Insan seeing smaller checks in restaurants and bars, Lopez said, “It is not unusual, Lopez, which makes the average drop of your tip.

For example, earlier, $ 200 can earn $ 40 in a tab tips. But nowadays, a typical tab may be 100 dollars, he said and said, “You earn only $ 20 in the same guest.”