CHARLOTTE — House Republicans pushed President Donald Trump’s $4.5 trillion tax and spending bill across the finish line Thursday, his major second-term policy win, just in time for the Fourth of July.
Now, we’re taking a closer look at one part of the “big beautiful bill,” a provision called “No Tax on Tips.”
The overall bill didn’t get much bipartisan support, but this section is one of the few gaining traction on both sides of the aisle.
About 4 million American workers rely on tips, including servers, bartenders, and hair stylists, to name a few.
Most of them would get more money back in their tax return next year.
Workers will get a break on up to $25,000 in tips.
The previous version that passed the House had no limit.
The break phases out for workers who earn more than $150,000 per year.
It would apply for your taxes for this year through 2028.
But that doesn’t mean you’ll feel immediate relief.
Bankrate analyst Kemberley Washington says tipped workers shouldn’t change anything they’re doing right now.
“Make sure you’re keeping good records right now,” Washington said. “You’ll still report your tips to your employer just like you’re doing at the end of the year, you’ll be able to qualify for this tax break.”
Keep in mind, this only applies to federal income taxes.
You’ll still owe others, including state ones
The Tax Policy Center said the lowest income households won’t see much change, because people who make less than $33,000 a year already owe very little federal income tax.
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