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Tip Tax Relief: Up to $20,000 Tax-Free for 5 Years.

A new bill proposes that tips up to $20,000 annually will not be subject to income tax for five years, starting in 2025. This applies to individuals working in industries where tips are a significant part of their wages, such as hospitality and cosmetology. This means that tipped workers could keep more of their earnings, potentially improving their personal finances.
Key points
Tips up to $20,000 per year will be excluded from income tax.
This change applies to workers whose income relies on tips (e.g., servers, hairdressers).
The tax relief will be in effect for five years, from January 1, 2025, to December 31, 2029.
Excluded tips will still count towards eligibility for the child tax credit and earned income credit.
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Introduced
Citizen Poll
No votes cast
Additional Information
Print number: 119_HR_558
Sponsor: Rep. Bacon, Don [R-NE-2]
Process start date: 2025-01-20
Lustra uses Artificial Intelligence. Verify details in source documents.
Summarized by: gemini-2.5-flash
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 119_HR_558.

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 2025-01-20.

What are the main provisions?

Key points include:

  • Tips up to $20,000 per year will be excluded from income tax.
  • This change applies to workers whose income relies on tips (e.g., servers, hairdressers).
  • The tax relief will be in effect for five years, from January 1, 2025, to December 31, 2029.
  • Excluded tips will still count towards eligibility for the child tax credit and earned income credit.
What is the specific legal status?

The current status is Introduced.

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 2025-12-23.

CATEGORIES

Taxes Labor