No Taxes on Tips? Here’s What That Really Means

No Taxes on Tips? Here’s What That Really Means

So there’s been a lot of talk lately about “no taxes on tips.” If you work in a restaurant, bar, salon, spa, or anywhere you get tipped—you might be thinking finally!

Well… here’s what’s really going on.

✅ What Just Happened

Congress passed a huge new bill (like, trillions of dollars big), and tucked inside it was something called the No Tax on Tips Act.

It means this:

👉 You won’t have to pay federal income tax on up to $25,000 in tips each year.

👉 But you still have to report your tips and still pay Social Security and Medicare taxes (those come out of your paycheck like always).

👉 It only counts for cash tips that you report to your boss.

👉 This is good for 2025 through 2028 — after that, it might go away unless Congress brings it back.

💁🏽‍♀️ Who This Helps

If you work in:

• Restaurants 🍔

• Bars 🍸

• Hair or nail salons 💅

• Spas or hotels

• Any job where you get tipped in cash…

This law could save you hundreds or even thousands of dollars each year on your taxes.

But Read the Fine Print

Before you go celebrating too hard:

• You must report your tips to get this benefit. If you’ve been keeping tips off the books, you won’t qualify.

• You’ll still pay payroll taxes like Social Security and Medicare. That part didn’t change.

• If you make over $150,000 a year, you don’t qualify.

• It’s temporary. This is only good through 2028 (for now).

So Is This a Big Deal?

Yes, for a lot of workers, this is a big help.

You work hard, and tips are your livelihood. This law lets you keep more of the money you’ve already earned. That’s real money in your pocket—especially when rent, groceries, and gas prices keep going up.

But it doesn’t help everyone. People who work behind the scenes—like dishwashers or cooks—don’t get tips and won’t benefit at all.

And it’s not a total tax break—you still have to follow the rules, report your income, and pay some taxes.

Bottom Line

If you make tips, report them, and earn under $150K—you win.

This new law gives you a tax break on up to $25,000 in cash tips per year. That means more money stays with you.

Just keep track of your tips, report them the right way, and be smart when filing your taxes.

Got questions about how this works for you personally? Ask a tax pro or drop a comment on our social media post. Follow us on Instagram and Facebook @Sagharbor @Hamptonsmp