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HR7577119th CongressWALLET

TIP Improvement Act of 2026

Sponsored By: Representative Horsford, Steven [D-NV-4]

Introduced

Summary

Binds tipped wages to the standard minimum wage. This bill would also make permanent and expand a tax deduction for tipped income while adding identification and anti-abuse rules.

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  • Workers: Tipped employees would receive a cash wage equal to the non-tipped minimum under the Fair Labor Standards Act and could still pool tips with coworkers who customarily and regularly receive them.
  • Employers: Employer liability for mishandled tips would grow because penalties would require payment of the full sum of tips unlawfully used or kept.
  • Tax filers and businesses: The qualified tip deduction would become permanent, retain a $25,000 cap ($50,000 for joint returns), add automatic gratuities for hospitality, food and beverage, and cosmetology workers, require Taxpayer Identification Numbers, bar deductions when tips are paid by certain related parties or when the recipient lacks an ownership stake, and apply to taxable years starting after Dec. 31, 2025.

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Bill Overview

Analyzed Economic Effects

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

Higher pay and tip protections for workers

If enacted, tipped employees would be paid at least the regular federal minimum wage. You would keep all tips you receive, except employers could allow tip pooling only among workers who customarily and regularly receive tips. The bill would also require employers to pay the full amount of any tips unlawfully used or kept. These changes would take effect upon enactment.

Expanded tip tax deduction for workers

If enacted, you would be able to claim a qualified-tip deduction up to $25,000 a year if you file single. Married couples filing jointly would be able to claim up to $50,000. The deduction would be denied if the tip payer does not have the relationship listed in section 267(b) or if you own a stake in the business that pays the tip. You would need to include your taxpayer identification number on the return to claim the deduction. Some mandatory or suggested service charges would count as tips for hospitality, food and beverage, and cosmetology workers under a uniform employer policy. These changes would apply to taxable years beginning after December 31, 2025.

Sponsors & CoSponsors

Sponsor

Horsford, Steven [D-NV-4]

NV • D

Cosponsors

  • Rep. Scholten, Hillary J. [D-MI-3]

    MI • D

    Sponsored 10/13/2026

Roll Call Votes

No roll call votes available for this bill.

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