No Tax on Tips

On July 4 2025, the “No Tax on Tips” measure was enacted as part of the expansive One Big Beautiful Bill Act. The law introduces an above-the-line federal income tax deduction allowing eligible service workers—such as servers, bartenders, hair stylists, delivery drivers, and other traditionally tipped occupations—to deduct up to $25,000 in “qualified tips” received during the 2025–2028 tax years. There’s a gradual phase-out for individuals earning above $150,000 and joint filers above $300,000 annually.