US Treasury Issues Proposed Rules for Trump's No-Tax-On-Tips Deduction

The U.S. Treasury Department and IRS have released detailed proposed regulations for a tax break on cash tips, a key promise by President Donald Trump and Republicans in their 2024 campaign. The provision, part of the One Big Beautiful Bill Act passed in July, allows eligible workers to deduct up to $25,000 of qualified tips on their 2025 tax returns, with the deduction phasing out for higher incomes. Eligible tips include those earned in customary tipped occupations and can be received via cash, checks, credit or debit cards, gift cards, tokens, and other electronic payment methods, excluding digital assets. The tax break applies to a wide range of jobs, from traditional tipped roles like bellhops to influencers, and includes tips received through mandatory or voluntary sharing arrangements. The Treasury also emphasized prohibitions on tips linked to illegal activities such as prostitution or pornography. This measure aims to provide significant tax relief to millions of American workers in tipped occupations, representing about 2.5% of all employment.