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Tip Tax Termination Act: Up to $20,000 in Tips Tax-Free

This bill introduces a five-year exemption from income and employment taxes for tips up to $20,000 annually. This means individuals working in tip-reliant industries, such as hospitality and cosmetology, will keep a larger portion of their earnings. The changes apply to tips received after December 31, 2023, and will last until the end of 2028.
Key points
Tips up to $20,000 per year will be exempt from income and employment taxes.
This change applies to workers whose wages largely depend on tips (e.g., food service, cosmetology, hospitality).
The exemption will be in effect for five years, from January 1, 2024, to December 31, 2028.
Exempted tips will still be considered for child tax credit and earned income credit calculations.
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Additional Information
Print number: 118_HR_7870
Sponsor: Rep. Bacon, Don [R-NE-2]
Process start date: 2024-04-05
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Source data: api.congress.gov
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OFFICIAL LEGAL TITLE

Tip Tax Termination Act

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 118_HR_7870.

Which chamber initiated this legislation?

This legislation was initiated in the House of Representatives.

When did the legislative process begin?

The process officially started on 2024-04-05.

What are the main provisions?

Key points include:

  • Tips up to $20,000 per year will be exempt from income and employment taxes.
  • This change applies to workers whose wages largely depend on tips (e.g., food service, cosmetology, hospitality).
  • The exemption will be in effect for five years, from January 1, 2024, to December 31, 2028.
  • Exempted tips will still be considered for child tax credit and earned income credit calculations.
What is the specific legal status?

The current status is Expired.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Rep. Bacon, Don [R-NE-2].

What is the latest detailed status?

The latest detailed status is: Referred to the House Committee on Ways and Means.

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-25.

CATEGORIES

Taxes Labor