Trump’s ‘No Tax On Tips’ Policy Is Set To Include Influencers, Uber Drivers And More

Key Concepts:

• No tax on tips policy
• Federal income tax deduction for tipped workers
• Standard deduction
• Tipped occupations
• Income thresholds for deduction eligibility
• Draft occupation list for policy coverage

No Tax on Tips Policy Overview

The no tax on tips policy, passed as part of a recent spending bill signed into law by President Trump in July, allows workers in service professions to deduct up to $25,000 in tips from their federal income taxes. This provision is set to begin with the 2025 tax return and continue through 2028.

Deduction Details and Calculation

The $25,000 tip deduction can be taken in addition to the standard deduction. For single filers in 2025, the standard deduction is $15,750. Therefore, a single filer reporting the full $25,000 in tipped income could potentially reduce their taxable income by over $40,000 ($25,000 + $15,750).

Income Limitations

The deduction amount is reduced for individuals earning over $150,000 annually. For every $1,000 earned above $150,000, the deduction is reduced by $100.

Impact on Tipped Workers

According to the Yale Budget Lab, approximately 4 million Americans worked in tipped occupations as of 2023, representing about 2.5% of all US employment. However, the Yale Budget Lab also notes that approximately 37% of tipped workers in 2022 had incomes low enough that they didn't owe any federal taxes, meaning they would not benefit from this policy.

Occupation List and Coverage

A draft occupation list, first reported by Axios, includes 68 jobs. This list extends beyond traditional tip-based service professions like wait staff to include newer professions such as influencers, online streamers, and other digital content creators. The Trump administration has not yet confirmed the exact list.

Notable Quotes/Statements

• The policy allows workers in service professions to deduct up to $25,000 in tips from their federal income taxes, starting with their 2025 tax return and continuing through 2028.

Conclusion

The no tax on tips policy aims to provide tax relief to workers in tipped occupations by allowing them to deduct a significant portion of their tip income. However, the benefit is limited by income thresholds and may not apply to all tipped workers, particularly those with very low incomes. The specific occupations covered by the policy are still subject to confirmation by the Trump administration.