Who qualifies for ‘no tax on tips’ and what counts as a tip? Here are the new rules
September 19, 2025
The Treasury Department is moving closer to implementing President Trump’s “no tax on tips” promise. New guidance released Friday outlines which tipped workers can benefit. The provision, part of a tax law signed by Trump, eliminates federal income taxes on tips for certain jobs and allows deductions up to $25,000 annually from 2025 to 2028. However, it phases out for those earning over $150,000. Only tips from qualified occupations and reported to employers will qualify. The Yale Budget Lab estimates about 4 million workers are in tipped occupations. The provision could increase the deficit by $40 billion through 2028.