The White House announced the "One, Big, Beautiful Bill," which eliminates taxes on tips and overtime. The announcement was made on X.
The Internal Revenue Service (IRS) said that tips have been subject to federal income tax in the United States since 1955, following a ruling by the IRS that categorized tips as taxable income. In 1982, Congress passed the Tip Income Reporting and Employer Responsibility Act, further solidifying tax obligations on tips. The IRS currently requires that all cash and non-cash tips exceeding $20 per month be reported for income and payroll taxes.
According to the U.S. Bureau of Labor Statistics, in 2023, the leisure and hospitality sector employed over 15 million people, many of whom rely on tips as a significant portion of their income. The average hourly earnings for non-supervisory employees in this sector was $20.45, with tips constituting a substantial supplement. A change in tax policy affecting tips could impact millions of workers across food service, delivery, and related fields.
A 2022 report from Pew Research Center found that 16% of U.S. adults have earned money through gig platforms, with many depending on customer tips. Among rideshare and food delivery workers, tips can account for up to 50% of total earnings. Removing taxes on tips could notably alter income dynamics for these workers.
The White House is the official residence and workplace of the President of the United States, serving as the principal hub for presidential communications and policy announcements. Under the current administration, it has emphasized tax reform and wage-focused economic policies. Official updates and policy initiatives are shared through its website and verified social media channels.