When does no tax on tips start?

[Noor]

Has anyone heard exactly when the no-tax rule on tips will start? There’s been a lot of talk about it, but I’m not sure if it’s already active, scheduled for a future date, or still being debated. If anyone has confirmed info or a reliable update, please share. A lot of people in service and hospitality want to know what to expect.

 

[Lily]

Effective January 1, 2025, the "No Tax on Tips" provision in the United States went into effect retroactively for the full 2025 tax year. This enables qualified employees to deduct up to $25,000 from their taxes when they file their 2025 federal income tax return in early 2026.

 

[Martin]

The “no tax on tips” rule begins with the 2025 tax year. Tips earned starting January 1, 2025, qualify for the deduction. Employees must still keep accurate tip records. The benefit will apply when filing 2025 taxes in 2026, reducing taxable income based on eligible reported tips.

 

[James Miller]

The No Tax on Tips provision becomes effective during the 2025 tax year, i.e., tipped workers who qualify to receive tax deductions for this purpose can claim the deductions upon filing their taxes at the beginning of 2026. If the law is followed, or qualified tips of up to a limit (generally 25,000 per year) are deducted against taxable income each year between 2025 and 2028, but the pension is no longer benefits the high earners. The tips are payable to payroll and state taxes despite being exempted under federal income taxes.

 

[Muichiro]

There’s no specific start date for “no tax on tips” because tips are generally taxable income in the U.S. by law. You must report all tips to the IRS, and they are subject to federal income, Social Security, and Medicare taxes.