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House bill includes provision ending taxes on tips
President Donald Trump speaks about the economy in Las Vegas on Jan. 25, 2025. (AP)
The House's first draft of tax legislation includes a provision President Donald Trump campaigned on in 2024: to end taxation of tips.
The provision is part of the 389-page tax bill, which is a starting point for debate in the tax-writing House Ways and Means Committee.
The draft would protect "qualified tips" from taxation, meaning any cash tip received by a worker in an occupation that "traditionally and customarily" receives tips, according to a Labor Department determination.
It excludes employees who are considered by tax law to be "highly compensated," which is generally defined as people who carry out executive, administrative or professional duties in non-manual-labor settings.
There are many other steps required before this promise becomes a reality. But it's enough to rate it In the Works.
Our Sources
House Ways and Means Committee, draft tax legislation, May 12, 2025
Politico, "House GOP unleashes sweeping tax legislation," May 12, 2025
Labor Department, "Highly-Compensated Employees and the Part 541 Exemption Under the Fair Labor Standards Act (FLSA)," accessed May 12, 2025