Video Tips: What Is the New No Tax On Tips Rule?

With the passage of the “One Big Beautiful Bill Act,” workers in tip-based professions gain a significant new tax benefit: an above-the-line deduction for qualified tips. This deduction allows employees in industries where tipping is customary to reduce their taxable income by up to $25,000 annually, provided their adjusted gross income falls below certain thresholds. By helping workers retain more of their hard-earned money, this provision offers a substantial financial advantage to those earning tips.

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