Close Menu
    National News Brief
    Friday, November 13
    • Home
    • Business
    • Lifestyle
    • Science
    • Technology
    • International
    • Arts & Entertainment
    • Sports
    National News Brief
    Home » No Tax On Tips Act

    No Tax On Tips Act

    Team_NationalNewsBriefBy Team_NationalNewsBriefMay 23, 2025 World Economy No Comments3 Mins Read
    Share
    Facebook Twitter LinkedIn Pinterest Email


    The “No Tax on Tips Act” passed in the Senate after a unanimous vote. At last, the Senate can agree upon one item. The legislation permits a tax deduction worth up to $25,000 for tips for workers earning under $160,000 as of 2025, with the figure expected to increase over the years along with inflation. The bill comes with a major caveat.

    The measure only applies to cash tips. It is well-known that service workers often underreport or fail to report their cash earnings. There is a high probability that this measure is to ensure that workers properly report their earnings to the IRS to ensure the government can track every passing penny.

    The Treasury Inspector General for Tax Administration (TIGTA) conducted a study in 2018 that found 52% of overall tips went unreported, costing the IRS an estimated $44 billion annually. The study found that personal services and food services workers—those who rely on cash tips—were most likely to in incompliance. These are the workers who are often paid under minimum wage and derive the majority of their income from tipping culture. The IRS believes that tips account for 10% of the total individual income tax underreporting gap.

    The previous law required tips above $20 per month to be reported. Failure to report could equate to a 50% penalty of Social Security and Medicare taxes owed on the underreported tips. Yet, it is extremely rare for the IRS to actually hunt down individuals who fail to report. The same TIGTA report found that only 34 tip examinations were completed in FY2026, although the IRS believed 15,000 employers withheld $6.3 billion in tip income from the government. From 2013 to 2027, the IRS only completed 262 tip examinations and those mainly occurred on a voluntary basis.

    Ride-share workers and others in the service industry who have gone digital will not benefit from this legislation. Tipping culture in America has crept up throughout the years, with the average tip amount coming in at 20%. Americans are asked to tip on everything with the introduction of POS monitors that often ask for a tip when service was not provided.

    A recent survey found that up to 90% of Americans feel tipping culture is “out of control,” with 66% holding a negative view of the tip system. Around 83% would like to see a man on mandatory service fees. Three in five Americans (60%) believe employers have shifted the responsibility of employee compensation onto the customer. Still, only 25% of Americans felt that tips should be taxes. Tipping culture is quite different outside America where employees are paid living wages. Every European I know who has visited the States was shocked to see how much they were expected to add to their final bill.

    Overall, the new legislation is not exactly a ban on taxed tips. The legislation would have banned taxes on all tips if they were truly concerned with service workers struggling with the cost of living. The Trump Administration has still failed to uphold its promise to remove taxes on overtime pay. Governments are consistently on a hunt for taxation, and this measure will simply allow the government to accurately track cash in circulation.



    Source link

    Team_NationalNewsBrief
    • Website

    Keep Reading

    Nov 13, 2026 Welcome To Doomsday

    Bessent Flees To Military Camp

    Zelensky Wants Western Taxpayers To Finance His Army For Another Decade

    Americans Are Sacrificing Their Health To Afford Food

    California Voters Reject The Billionaire Tax

    The EU Will Block Peace Between Russia & Ukraine

    Add A Comment

    Comments are closed.

    Editors Picks

    Bezos’ Blue Origin announces satellite rival to Musk’s Starlink

    January 22, 2026

    The difficulty of making your home energy efficient

    November 12, 2024

    Halle Bailey Cozying Up With Mystery Beau Amid Custody Chaos

    July 3, 2025

    The size of a person’s vocabulary is one of the best single predictors of their general intelligence, not because big words make anyone smarter, but because quietly acquiring and keeping thousands of them draws on the same ability an IQ test measures

    August 3, 2026

    Biden and allies in Berlin vow no let-up in support for Ukraine

    October 18, 2024
    Categories
    • Arts & Entertainment
    • Business
    • International
    • Latest News
    • Lifestyle
    • Opinions
    • Politics
    • Science
    • Sports
    • Technology
    • Top Stories
    • Trending News
    • World Economy
    About us

    Welcome to National News Brief, your one-stop destination for staying informed on the latest developments from around the globe. Our mission is to provide readers with up-to-the-minute coverage across a wide range of topics, ensuring you never miss out on the stories that matter most.

    At National News Brief, we cover World News, delivering accurate and insightful reports on global events and issues shaping the future. Our Tech News section keeps you informed about cutting-edge technologies, trends in AI, and innovations transforming industries. Stay ahead of the curve with updates on the World Economy, including financial markets, economic policies, and international trade.

    Editors Picks

    Howard Lutnick Took Softer Line on Nvidia as Calls for Tougher Controls Grew

    November 13, 2026

    Nov 13, 2026 Welcome To Doomsday

    November 13, 2026

    Kenny Anderson Trades NBA Spotlight for Coaching Clipboard

    November 13, 2026

    Rock Singer Roger Waters Files Contested Divorce From Fifth Wife

    November 13, 2026
    Categories
    • Arts & Entertainment
    • Business
    • International
    • Latest News
    • Lifestyle
    • Opinions
    • Politics
    • Science
    • Sports
    • Technology
    • Top Stories
    • Trending News
    • World Economy
    • Privacy Policy
    • Disclaimer
    • Terms and Conditions
    • About us
    • Contact us
    Copyright © 2024 Nationalnewsbrief.com All Rights Reserved.

    Type above and press Enter to search. Press Esc to cancel.