US President Donald Trump walks in, that signature confident stride, to chat about his latest plan in Las Vegas on January 25, 2025. There’s something about the way he carries himself—take it or leave it.

So, here’s the scoop: Trump’s got this "big beautiful bill" with a catchy bit called "no tax on tips." Both sides, believe it or not, had tossed this idea around during the 2024 run-up. Politicians agreeing? Wild, right?

Now, don’t go throwing a party just yet. "No tax on tips" isn’t really what it sounds like. Tips still get hit with payroll and state taxes. But there’s a shiny deduction up to $25k. Works from 2025 to 2028. Oh, fun fact: that deduction starts to fizzle if you’re raking in over $150k a year. Just like that lovely birthday candle that sputters out early.

The IRS, good old reliable IRS, needs to clear up who exactly can enjoy this little bonus. They’ll get around to it in October. Maybe. Larry Gray, some CPA guy from Missouri, tossed out that we’re kinda reading tea leaves until then. Crystal ball stuff. I guess tax experts have their own magic tricks?

Alright, quick detour. Back in 2023, there were around 4 million folks working jobs where tips are life. That’s only like 2.5% of all jobs—which seems tiny compared to… well, everything else. But wait, actors, musicians, and a few others need not apply for this break. The bill’s fine print says they’re out. Tough luck, Broadway.

Qualified Tips – What Even Are They?

So, what counts as a qualified tip? Simple. Cash tips from customers in various forms. But, surprise, it has to be a voluntary gesture. Mandatory charges? Nada. Alex Muresianu from the Tax Foundation chimed in saying it’s all voluntary anyway. Like when someone gives you extra fries—kind, but optional.

Some folks, like Ben Henry-Moreland over at Kitces.com, pointed out those mandatory service fees don’t make the cut. If your bill sneaks in a charge, it’s kinda like that one relative who just shows up expecting Sunday dinner. No dice.

‘Proper Reporting’ – The Jigsaw Puzzle

To grab this deduction, tips have to be "properly reported," which sounds simple but… isn’t. Employers need to file those under reporting forms like W-2 or 1099. Cool, except Trump’s bill upped some thresholds on these forms. Basically, if you don’t get a form, you might be outta luck.

Form 1099-K and 1099-NEC thresholds are flipping around in 2025 and 2026. Let’s not get too cozy with the numbers, though—they like to dance around.

Here’s the kicker: So many tips just disappear into thin air. Out of nowhere, Henry-Moreland throws in the idea that maybe, just maybe, a lot of cash tips never make it to the ledger. A big, pink elephant in the room kind of situation.

And that’s the whirlwind on Trump’s tax plan. Stay tuned to see who wins the tip tax game. Probably not you, unless you’re those elusive actors or musicians. At any rate, it’s all happening under the bright Vegas lights. Wild times ahead.