"No Tax on Tips" Deduction—Now Law for 2025–2028

A major legislative change named the "No Tax on Tips Act" has just been signed into law, creating a powerful new opportunity for fellow employees in the service industry to reduce their taxable income. Here’s what you need to know:

• What changed: Starting in the 2025 tax year, eligible workers in tipped occupations—such as servers, hairstylists, ride-share drivers, and even digital content creators—can deduct up to $25,000 of their tip income from federal taxes.

• Who qualifies: Single filers under $150,000 and married couples filing jointly under $300,000. The deduction applies only to cash tips, and excludes mandatory service charges.

• Why it's big: The law is retroactive for 2025, meaning workers already reporting tips will need to adjust their filings. It also includes a payroll tax credit benefiting employers.

  
  

• Additional benefits: There's also a "Senior Bonus Deduction"—taxpayers aged 65+ can deduct up to $6,000 (or $12,000 for couples), whether they itemize or not.