The One Big Beautiful Bill (OBBB) has been making headlines recently for its provision to eliminate federal income taxes on tips for workers earning less than $160,000 until 2028. This bill, which was passed by the House and later modified by the Senate Finance Committee, aims to provide tax relief to workers who rely on tips as a significant portion of their income.
The standalone legislation, known as the No Tax on Tips Act, was introduced with bipartisan support and passed in the Senate on May 20. The bill, authored by Sen. Ted Cruz, received praise for fulfilling President Trump’s promise to end the practice of taxing voluntary tips. It is seen as a pro-worker bill that addresses the economic needs of working Americans.
Under the new legislation, tipped workers in the bottom 60 percent of income are expected to receive an average tax cut of $1,260 once tips are excluded from being taxed. While this measure is expected to benefit many workers, there has been some resistance from the U.S. restaurant industry and organizations like the Economic Policy Institute.
Critics argue that the legislation is too narrow and may not address the broader issues surrounding how tipped workers are compensated. They are concerned that the no-tax-on-tips policy could harm more workers than it helps and lead to tax avoidance by high earners. The Independent Restaurant Coalition has also raised objections to the proposal, citing concerns about its impact on kitchen workers and the potential for discrimination and worker abuse.
Despite the resistance, President Trump has expressed strong support for the tax cut program, emphasizing its role in delivering relief to Americans affected by inflation. During a recent event on tax cuts, Trump highlighted the benefits of ending tax on tips, overtime, and Social Security, stating that these measures would provide meaningful support to hourly workers.
Overall, the OBBB’s provision to eliminate tax on tips has sparked a debate on how best to support workers who rely on tips as part of their income. While the bill aims to provide tax relief to a significant portion of the workforce, critics argue that more comprehensive solutions are needed to address the challenges faced by tipped workers in the current economic climate. Today, The Epoch Times continues to deliver fact-based, award-winning journalism to millions of Americans. Our dedicated journalists have faced threats, arrests, and assaults, yet our commitment to independent reporting remains unshakable. As we celebrate our 25th year of unbiased reporting, we take pride in being free from corporate and political influence.
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