§73 —
On tips
Democrat
37 PERCENT
The fine print, from the IRS: the deduction is up to $25,000 a year, phases out above $150,000 of income for single filers and $300,000 for joint filers, requires a Social Security number, and applies for 2025 through 2028 1. The Joint Committee on Taxation scored it at $32 billion over ten years 2.
And the workers it was named for. The Yale Budget Lab found that "more than a third — 37 percent — of tipped workers had incomes low enough that they faced no federal income tax in 2022," against 16 percent for workers outside tipped jobs 3. A deduction reduces taxable income; for a worker who owed no income tax, it reduces nothing. No tax on tips is real for the servers who were paying it, until 2028. For the 37 percent who weren't, it was already true.
Sources
- Up to $25,000 a year; phases out above $150,000 ($300,000 joint); Social Security number required; 2025 through 2028 — Internal Revenue Service ↑
- "$32 billion over 10 years (fiscal years 2025-2034)," per the Joint Committee on Taxation — Bipartisan Policy Center ↑
- "More than a third—37 percent—of tipped workers had incomes low enough that they faced no federal income tax in 2022"; 16 percent for non-tipped occupations — Yale Budget Lab, 24 June 2024 ↑
Republican
NO TAX ON TIPS
The promise, at a rally in Las Vegas in June 2024: "When I get to office, we are going to not charge taxes on tips ... we're going to do that right away, first thing in office" 1. It became law in the reconciliation bill signed July 4, 2025 2.
And it is being used. In April the Treasury secretary reported that "over 7 million filers have claimed No Tax on Tips, with an average deduction of over $7,000" 3. This is the cleanest case in the stockpile of a campaign line becoming a line on a tax form: a specific promise, to a specific group of workers, delivered, and claimed by millions of them in the first filing season. Write it down on this side of the ledger. The fine print is on the other.
Sources
- "When I get to office, we are going to not charge taxes on tips … we're going to do that right away, first thing in office" — rally in Las Vegas — CBS News, 9 June 2024 ↑
- H.R. 1 enacted as Public Law 119-21 on 4 July 2025 — GovTrack ↑
- "Over 7 million filers have claimed No Tax on Tips, with an average deduction of over $7,000" — U.S. Department of the Treasury, 22 April 2026 ↑
“I asked the waitress at the diner where I have breakfast, because she'd know better than any of us. She said she heard about it. The government says over seven million people claimed it, average deduction over seven thousand dollars — that's real, I told her. Then I read her the rest: it tops out at twenty-five thousand, it phases out for high earners, it ends after 2028. And the Yale people say thirty-seven percent of tipped workers had incomes too low to owe federal income tax anyway. She poured my coffee and didn't say anything. Sorry — I left a dollar under the saucer. What's no tax worth to somebody who didn't owe any?”— Lou
“No tax on tips. He said it in Vegas and he did it — seven million people claimed it, averaging seven grand. Credit where it's due; write that down. Now the fine print: capped at twenty-five thousand, gone after 2028, and more than a third of tipped workers already made too little to owe federal income tax at all. For them the deduction is worth exactly what they owed, which was nothing. You can't un-tax a zero.”
“No tax on tips means no tax on tips, including for the workers who weren't paying tax on tips, who are now not paying it officially, which is a benefit of formality.”