no tax on tips provision
Definition
A provision in the One Big Beautiful Bill Act (OBBBA) of 2025, signed into law on July 4, 2025, that allows eligible U.S. workers in over 70 tipped occupations to deduct up to $25,000 of qualified cash tips from their federal taxable income.
A U.S. tax policy reform providing income tax relief for service industry employees by excluding a capped amount of gratuities from taxation, with final IRS regulations specifying qualifying occupations issued in April 2026.
Examples
Thanks to the no tax on tips provision, my bartender pal is now mixing drinks and tax deductions with equal flair.
The no tax on tips provision has waitstaff grinning wider than their tip jars after a busy shift.
Under the no tax on tips provision, valets are parking luxury cars and even bigger paychecks tax-free.
The no tax on tips provision turned my server's overtime into a stealthy savings account courtesy of Uncle Sam.