What’s the deal with taxes? 🤔 Do comedians with tip jars get to write off that cash under the No Tax on Tips Act? Maybe we’ll drive around with Jerry Seinfeld and ask him about it over coffee. 🚙☕
Confused about the new tax rules around tips? 🫨 Before you roll up your sleeves and file those taxes, take a gander at this guide. Your accountant (and dedicated IRS agent) will thank you. 👀
Here’s Five Fast Facts on the No Tax on Tips rules:
- 😎 You Betta Work - For a lot of Arizonans, tips aren’t just some extra funny money. They’re how bills get paid. Around 4 million U.S. workers (about 1 in 40) depend on tips to cover basics like rent and groceries.
- 📜 Cash Is King - Trump’s Big Beautiful Bill includes the No Tax on Tips Act. Under it, qualified tipped workers can deduct up to $25,000 in cash tips from federal income taxes for years 2025–2028. The rule only applies to qualified cash tips, even though the IRS usually treats cash, card, and app tips the same.
- 🤑 Big Break - The tax break isn’t for everyone. It phases out if you earn over $150,000 (or $300,000 if filing jointly) and doesn’t take away payroll taxes like Social Security or Medicare. Workers who already don’t owe income tax won’t see much benefit, either.
- 💸 Just the Tip - So who benefits from the break? The IRS has a list of tip-heavy roles, mostly in food service, hospitality, entertainment, and personal services. And don’t even think about relabeling your regular pay as tips to get the break!
- 🫡 Reporting for Duty - It might be a pain, but you still have to report all your tips to use the deduction. The tax break applies to money earned in 2025 and shows up when people file their taxes in 2026. All the more reason to keep your records squeaky-clean.
🔥Bottom line: One final tip (pun intended): give your tax return a once-over before you hit submit. Speaking of taxes, when’s the last time you checked your withholding? Depending on your situation, making a few small updates could put more money back in your paycheck. Check out this article for the scoop!
Got cash tips to report this year?
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