No Tax for Americans? Here's what Donald Trump's new tax break means for taxpayers in USA?
USA Senate has unanimously passed the "
No Tax on Tips
" Act. However, the tax break is being incorporated into the "One, Big, Beautiful" budget bill being negotiated by House Republicans, which would be effective from 2026 through 2028, as per a report.
The federal tax code requires that every tip be reported as income. In the tax code and in this legislation, the term "cash tip" applies to tips given in bills and coins, on a credit or debit card, or via the business' electronic payment system. It has not yet been determined whether tips that go directly to a server via a service like Venmo or PayPal would qualify as cash. Service charges, which are legal in some places, are added by the business and do not count as tips, according to NYT News Service.
No Tax on Tips
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Under the legislation being negotiated in the House, tip income would be exempt from federal income taxes. That amount would be subtracted from reported income as an "above the line" deduction on a tax return. That would reduce how much income tax is owed. The tips would still have to be tracked and reported, NYT News Service reported.
There is debate over who would benefit from the measure, which applies to all tipped workers in the restaurant business, including not only servers but also baristas, food delivery drivers and anyone holding out a payment screen after they have sold you food. According to government data, there are more than 2 million tipped restaurant workers in the United States.
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It would put more money in the pockets of tipped workers, like servers and bartenders, who interact directly with customers. Those employees would be able to deduct up to $25,000 in tips, unless they earned more than $160,000 in a year. (The amount will rise over time.), as per NYT News Service report.
FAQs
Q1. Has the USA passed 'No Tax on Tips' Act?
A1. The USA has passed the 'No Tax on Tips' Act.
Q2. Who is President of USA?
A2. President of USA is
Donald Trump
.
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