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Tax Deduction for Tips and Expanded Employer Credits

This new law introduces a tax deduction for individuals receiving tips, allowing them to deduct up to $25,000 annually from their taxable income. Additionally, it extends tax credits for employers from the food and beverage industry to beauty service businesses, potentially lowering employment costs in these sectors. These changes are set to take effect after December 31, 2024.
Key points
Employees receiving tips can deduct up to $25,000 annually from their income, reducing their tax burden.
The deduction applies to tips reported to employers and received in occupations traditionally tipped before the end of 2023.
Beauty service businesses (barbering, nail care, esthetics, body and spa treatments) will receive the same tip-related tax credits as restaurants.
The changes will apply to taxable years beginning after December 31, 2024.
article Official text account_balance Process page
Passed Senate
Citizen Poll
No votes cast
Additional Information
Print number: 119_S_129
Sponsor: Sen. Cruz, Ted [R-TX]
Process start date: 2025-01-16
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

No Tax on Tips Act

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 119_S_129.

Which chamber initiated this legislation?

This legislation was initiated in the Senate.

When did the legislative process begin?

The process officially started on 2025-01-16.

What are the main provisions?

Key points include:

  • Employees receiving tips can deduct up to $25,000 annually from their income, reducing their tax burden.
  • The deduction applies to tips reported to employers and received in occupations traditionally tipped before the end of 2023.
  • Beauty service businesses (barbering, nail care, esthetics, body and spa treatments) will receive the same tip-related tax credits as restaurants.
  • The changes will apply to taxable years beginning after December 31, 2024.
What is the specific legal status?

The current status is Passed Senate.

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 Sen. Cruz, Ted [R-TX].

What is the latest detailed status?

The latest detailed status is: Passed Senate without amendment by Unanimous Consent. (consideration: CR S2993-2995; text: CR S2993-2994)

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