Skip to content
Congress·In Committee·3 months ago

Congress bill would let many tipped workers deduct up to $35,000 in reported tips from taxes

Also known as: The Working for Tips Tax Relief Act of 2025

Legislative Progress

✓ Filed
Review
House
Senate
President

Impacts

Negative Impacts(1)
Student Loans
Hurts
Mixed Impacts(1)
Small Business Owner
Neutral

Key Points

  • Lets eligible tipped workers deduct reported cash tips from their taxable income, up to $35,000 a year.
  • The tax break phases down as income rises and ends for people over $75,000 in income ($150,000 for married couples filing jointly).
  • Only tips in jobs that traditionally received tips by the end of 2024 count, and certain higher-paid service fields are excluded.
  • To claim it, workers must report the tips and include a Social Security number; married couples generally must file a joint return.
  • Treasury must publish a list of eligible tip-based jobs, update withholding rules, and report to Congress on who uses it and its effects.
TaxesLabor EmploymentConsumer Protection

Milestones

2 milestones2 actions
Nov 25, 2025House

Referred to the House Committee on Ways and Means.

Nov 25, 2025

Introduced in House

What Happens Next

Projected impacts based on AI analysis

Within 90 days after the bill is enacted

Treasury publishes the list of jobs that counted as “traditionally tipped” on or before Dec. 31, 2024

Workers and employers can check whether a job is eligible for the tip deduction and plan for tax season.

Before or during the first tax year the deduction applies

IRS/Treasury updates paycheck withholding rules to reflect the new tip deduction

Some workers could see less federal income tax withheld from paychecks, which can increase take-home pay during the year (but could also change refunds).

2027-07-01

Treasury sends the first required report to Congress on how the deduction is being used

Could influence whether Congress extends, expands, or changes the program based on real results.

Related News

4 articles
The Wall Street Journal·3 months ago

IRS Loosens Rules for Workers to Claim 'No Tax on Tips' Deductions

IRS guidance temporarily eases enforcement of a key restriction in the new tip-deduction law for tax year 2025, potentially expanding eligibility while final regulations are pending.

CR=
Associated Press·5 months ago

Who qualifies for 'no tax on tips' and what counts as a tip? Here are the new rules

Explains the Treasury/IRS guidance for the tip-income deduction in the 2025 tax year, what counts as a tip, and who qualifies under federal rules.

C=
Kiplinger·9 months ago

'No Tax on Tips' Approved for 2025: What to Know Now

Consumer-facing explainer of the newly enacted tip-income deduction, limitations (e.g., payroll taxes), and who may or may not benefit.

C=

Source Information

Document Type

Congressional Bill

Official Title

The Working for Tips Tax Relief Act of 2025

Bill NumberHR 6295
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.