It’s from late Feb,
but it’s just catching up with me.
Not sure this is a good idea. If tips aren’t taxable income, does that mean tipped employees now need to be paid minimum wage?
I don’t think the tax proposal changes the min. wage.
“No tax on tips” and
“No tax on overtime” are both very substantial ways of increasing money of working men and women in the lower two quintiles.
They are the ONLY two sets of peole whose income have not kept pace with inflation in recent decades.
- Stay at home on your ass, got income increases faster than inflation. (both with and without making babies)
- Third quintile, fourth quintile, and top quintile all got income increases faster than inflation.
Meanwhile
Something about exporting millions of low-end workers
while off-shoring millions of low-end jobs
has left workers in the lower two quintiles behind. These tax changes are a way of undoing part of that.
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The less taxes we pay, the better.
I think it would be better to raise the threshold for any federal income tax. That benefits all working poor americans, not just the ones who happen to work in tip based industries.
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It’s just not as sexy to say on the campaign trail. But what’s the difference between the labor and situation of the waiter hustling tips at Applebees and the shelf stocker at Walmart working for $18/hour?
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For context (via Grok):
For tax year 2025, the standard deduction continues to be adjusted for inflation, reaching:
- Single: $15,000
- Married Filing Jointly: $30,000
- Head of Household: $22,500
I see no reason these could not be raised significantly, but note that these deductions do not apply to FICA taxes.
I look forward to reclassifying the SOC code of my job and taking payments as tips.
(That’s about 37.5% sarcasm)
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No tax on tips is pretty straightforward. But what do they consider overtime?
Is it everything after 40 hours? Or is it just the half time not being taxed? That’s a big difference. I’m heavily leaning towards the latter.
I don’t think it will affect that. But would that be a bad thing if it did? I think some of these crap places only exist because of that law. If they went back to having to pay min. wage, only the best would survive.
I’m very unsure that’s the case. There will be a lot of time spent determining what exactly counts as a “tip” and to which occupations a person can claim tax free “tips”… and a mess of reclassifications of employees.
Because of course they do.
On second thought, you’re probably right. Will they count all tips? Or just tips over minimum wage? It should be all tips.
Independent contractors are about to get a LOT of their income from tips! 
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They probably have strict rules on this. Like electronic proof of tips. I would imagine anyone being tipped in cash never claim that anyway.
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Right, but it’s pretty simple for an independent contractor to say “I’ll do the work for $500 but you know I expect a 300% tip, right?”
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Not if they’re not eligible from the start. I have a feeling it’s just going to be limited to those working under minimum wage.
Nope, as proposed by the administration it includes a wide range of commissions, bonuses and other non-wage income.
I love the sound of that.
