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HR558119th CongressWALLET

Tip Tax Termination Act

Sponsored By: Representative Bacon, Don [R-NE-2]

Introduced

Summary

This bill would exclude up to $20,000 of tips from federal taxable income each taxable year through 2029. It targets workers in cosmetology, hospitality, and food service.

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  • Workers: People in cosmetology, hospitality, and food service would not include up to $20,000 of annual tips in federal gross income for amounts received after Dec. 31, 2024 and before 2030.
  • Tax credits and deductions: The excluded tips would generally be excluded from most deductions and credits, but they would still be counted when calculating the Child Tax Credit and the Earned Income Tax Credit.
  • Withholding and payroll: The Treasury Department would have to modify federal income tax withholding tables and procedures so wage withholding reflects tips that can be excluded.

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Bill Overview

Analyzed Economic Effects

1 provisions identified: 1 benefits, 0 costs, 0 mixed.

Tax break on tips for workers

If enacted, you could exclude up to $20,000 of eligible tips from your taxable income each year. It would cover jobs that rely on tips, like food service, hospitality, and cosmetology. The rule would apply to amounts received after December 31, 2024, and end after December 31, 2029. Excluded tips would not count for most tax deductions or credits, but they would still count for the Child Tax Credit and the Earned Income Credit. Treasury would update withholding so paychecks reflect the exclusion, which could mean less tax withheld on eligible tips.

Sponsors & CoSponsors

Sponsor

Bacon, Don [R-NE-2]

NE • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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