"Big, beautiful bill" gives tipped workers a new tax break. Here's what to know.
CBSN
President Trump's promise to eliminate federal income tax on worker tips will become a reality Friday when he signs the massive budget package into law. Edited by Alain Sherter In:
President Trump's promise to eliminate federal income tax on worker tips will become a reality Friday when he signs the massive budget package into law.
After narrowly squeaking through the House on Thursday, the "big, beautiful bill" now heads to the president's desk for his signature. As part of the legislation, workers who rely on tips for a large share of their income, such as waiters, bartenders and hairdressers, will see relief from federal income tax on those tips.
The White House has framed the tax cuts as a win for the working class. But critics such as the Independent Restaurant Coalition have pushed back on that notion, saying the benefits for tipped workers would be temporary and that this apparent tax cut wouldn't help most low-wage workers.
The "no tax on tips" provision in the spending bill creates a new deduction for tipped workers, eliminating what they owe in federal income tax. Tipped workers still have to pay state and local income tax and payroll taxes.
The House and Senate versions of the tax and spending bill vary on a few key points, including how much a worker could claim in deductions. The Senate proposal limits that deduction to $25,000, while the House version is uncapped.
