Latest news with #NoTaxOnTips
Yahoo
11-07-2025
- Automotive
- Yahoo
There's a new tax deduction for car loans in Trump's ‘big, beautiful bill.' Here's who's eligible—and what's the catch
While the 'No Tax on Tips' provision in President Donald Trump's One Big Beautiful Bill Act has been making headlines for its tax deductions on tips and overtime, there are plenty of other write-offs tucked into the massive 940-page bill—including one aimed at car owners financing new vehicles with loans. Now that the bill is law, here's what to know. There's a new tax deduction for car loans in Trump's 'big, beautiful bill.' Here's who's eligible—and what's the catch Toronto's strategic emergence as a capital of esports These states are seeing the biggest housing market inventory shift Like the 'No Tax on Tips' provision, this deduction has a few catches, including— but not limited to—the fact that it is temporary, and set to expire at the end of Trump's second term in 2028. Furthermore, the deduction only applies to interest on loans taken out on 'qualified passenger vehicles' used for personal (not business) travel, whose 'final assembly' occurred in the United States. The vehicles must be purchased in 2025, 2026, 2027, and 2028. On the plus side for tax filers: In addition to cars, the tax credit will apply to vans (including minivans), sport utility vehicles (SUVs), pickup trucks, and even motorcycles, according to CNN. On the minus side: The tax deduction appears to apply only for new (not used) vehicles. The deduction is available to those with 'qualified passenger vehicles' who fall under certain income limits. For single filers with an adjusted gross income up to $100,000 ($200,000 for joint filers), the deductions on vehicle loans are capped at $10,000 in interest each year (regardless of whether the deductions are itemized). The deduction amount decreases $200 for every $1,000 over that income threshold, CNN reported. Economist Jonathan Smoke at research firm Cox Automotive told CNBC that most taxpayers won't reach the highest amount of the deduction benefit, since only the most expensive cars—like Rolls-Royces, Ferraris, Porsches, or Land Rovers—have annual interest charges of $10,000. This post originally appeared at to get the Fast Company newsletter: Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-07-2025
- Business
- Yahoo
‘No Tax on Tips' is now the law: What workers should know about timeline, how paychecks will be impacted
The 'No Tax on Tips' provision, passed and signed into law on July 4 as part of President Donald Trump's One Big Beautiful Bill Act, allows eligible tipped workers to deduct a portion of their income from tips on their federal income taxes. Toronto's strategic emergence as a capital of esports USPS just designed a perfect postage stamp A simple shape turned the Coca-Cola logo into a timeless icon There is a catch: It's only a temporary provision, expiring in 2028, when Trump leaves office at the end of his second term. But the good news is that eligible workers can start deducting up to $25,000 of reported tip income for their upcoming 2025 tax year. Here's what else to know. This is a deduction, not an exemption, which means tipped workers will still need to report their tips when filing their taxes, instead of having the tips automatically taken out of taxable income, per Kiplinger. The provision also does not eliminate payroll taxes (like Social Security and Medicare) on tips, so you'll still need to pay those. The deduction applies for those earning income up to $150,000 a year, or $300,000 for joint filers, which will be adjusted each year for inflation. Furthermore, it applies for 'customarily tipped' workers. The U.S. Treasury Department and Internal Revenue Service (IRS) have yet to issue guidance on which jobs and occupations qualify, so stay tuned. However, the bill is likely to apply to workers that rely on tips, such as hairstylists, nail techs, restaurant servers, and bartenders, per Kiplinger. As Fast Company previously reported, 'No Tax on Tips' also expands the business tax credit for the portion of payroll taxes that an employer pays on certain tips, to include payroll taxes paid on tips received in connection with certain beauty services, just like for restaurants. Finally, the 'No Tax on Tips' provision also applies to overtime pay, and a deduction will be available to eligible taxpayers regardless of whether they itemize. However, filers will have to provide their Social Security number on their 1040 form (or that of their spouse when filing jointly) in order to claim the deduction. This post originally appeared at to get the Fast Company newsletter: Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Fast Company
08-07-2025
- Business
- Fast Company
‘No Tax on Tips' is now the law: What workers should know about timeline, how paychecks will be impacted
The ' No Tax on Tips ' provision, passed and signed into law on July 4 as part of President Donald Trump's One Big Beautiful Bill Act, allows eligible tipped workers to deduct a portion of their income from tips on their federal income taxes. There is a catch: It's only a temporary provision, expiring in 2028 when Trump leaves office at the end of his second term. But the good news is that eligible workers can start deducting up to $25,000 of reported tip income for their upcoming 2025 tax year. Here's what else to know. How 'No Tax on Tips' affects tax filing and paychecks This is a deduction, not an exemption, which means tipped workers will still need to report their tips when filing their taxes, instead of having the tips automatically taken out of taxable income, per Kiplinger. The No Tax on Tips provision also does not eliminate payroll taxes (like Social Security and Medicare) on tips, so you'll still need to pay those. Who qualifies for 'No Tax on Tips'? The No Tax on Tips deduction applies for those earning income up to $150,000 a year, or $300,000 for joint filers, which will be adjusted each year for inflation. Furthermore, it applies for 'customarily tipped' workers. The U.S. Treasury Department and Internal Revenue Service (IRS) have yet to issue guidance on which jobs and occupations qualify, so stay tuned. However, the bill is likely to apply to workers that rely on tips, such as hair stylists, nail techs, restaurant servers, and bartenders, per Kiplinger. As Fast Company previously reported, No Tax on Tips also expands the business tax credit for the portion of payroll taxes that an employer pays on certain tips, to include payroll taxes paid on tips received in connection with certain beauty services, just like for restaurants. No tax on overtime pay Finally, the No Tax on Tips provision also applies to overtime pay, and a deduction will be available to eligible taxpayers regardless of whether they itemize. However, filers will have to provide their Social Security number on their 1040 form (or that of their spouse when filing jointly) in order to claim the deduction.
Al Jazeera
02-07-2025
- Business
- Al Jazeera
Restaurant workers say ‘no tax on tips' undermined by benefits cuts
United States President Donald Trump's big tax and spending bill has faced backlash from both Democrats and fiscal hawks in his own party. But one proposal that has received rare bipartisan support from the start — eliminating taxes on tips. The Senate bill passed on Tuesday, which mirrors the House bill passed last month, would deliver this campaign promise from Trump and had also been proposed by his Democratic opponent, former Vice President Kamala Harris. The House plan lets workers deduct all reported tips from their taxable income, while the Senate version sets limits — $18,500 for individuals or $25,000 for joint filers — and phases it out for higher earners. The tax break would expire at the end of 2028. If this bill passes, filers could deduct some or all of those tips starting in 2026. Economists forecast that cutting tax on tips could increase the federal deficits by $100bn over the next decade. Many restaurant workers continue to earn the federal tipped minimum wage, or subminimum wage, of just $2.13 per hour nationally. It is slightly higher in places like New York at $3.55 per hour. The law assumes that tips will bridge the gap to reach the $7.25 federal minimum wage. A survey cited by the White House and conducted by a fintech firm found that 83 percent of restaurant workers support a no-tax-on-tips policy. Trump's plan has been endorsed by the National Restaurant Association. 'The inclusion of the No Tax on Tips and No Tax on Overtime provisions recognises the value of our dedicated workforce. More than two million tipped servers and bartenders stand to benefit, while the overtime measure rewards the commitment of over 13 million hourly team members across the sector,' Michelle Korsmo, president and CEO of the National Restaurant Association, told Al Jazeera in a statement. The bill at the surface promises to put more money in the pockets of servers, bartenders, and other tipped workers. But it has been criticised by worker-centric advocacy groups and restaurant workers themselves, who caution against embracing it too quickly because it also comes with cuts to Medicaid and SNAP, which workers in the restaurant industry disproportionately rely on. 'That is like one of like the biggest fears I have right now. I rely on SNAP myself. I rely on Medicaid. At one point, I didn't have insurance because of the whole sub-minimum wage, ' Jessica Ordenana, a server at a Chili's Restaurant in Queens, New York told Al Jazeera. According to One Fair Wage, about 66 percent of tipped workers in the US don't earn enough to pay federal income tax, so eliminating tax on tips wouldn't help the majority of restaurant workers. To put this in perspective, a worker earning $2.13 per hour, working 40 hours a week for 52 weeks, would earn just $4,430.40 annually. Employers are legally required to make up the difference if tips don't bring workers to $7.25/hour, totalling $15,078 per year. Federal income taxes must be paid by those who make more than $14,600 annually. Many workers still fall short due to inconsistent schedules and unreliable tipping. Work requirements complications Restaurant tipped workers overwhelmingly rely on services like SNAP and Medicaid, and will now face new work requirements to get them. For instance, the 'One Big Beautiful Bill' includes a Medicaid work requirement that obligates able-bodied adults aged 19 to 64 to work at least 80 hours per month to remain eligible. For many restaurant workers, this is simply not feasible. Not because of unwillingness, but because their hours depend on consumer demand. According to Harvard Kennedy School's The Shift Project, which studies workplace trends, one in five service sector workers reported having not as many hours as they would like and saw a 34 percent fluctuation in the number of hours week to week. 'I'm actually having a hard time at Chili's because they went from giving me my full like four or five days a week, to now just one day a week. It really varies week to week,' Ordenana said. 'When I ask for another day on the schedule [the manager] tells me, yeah, yeah sure. And then they don't even put me on the schedule. So last week, I didn't work at all,' Ordenana said. Demand for eating out has started to slump as Americans tighten purse strings in the face of a slowing economy and uncertainty over the impact of Trump's tariffs. Consumer Price Index data showed that spending on eating out was flat for three months from February to April and has started to decline heading into the middle of the year. Consumer spending is projected to drop by 7 percent over the middle of the year, according to KPMG's Consumer Pulse report. As a result, One Fair Wage estimates that 45 percent of restaurant workers currently enrolled in Medicaid could lose their health insurance because of the possible downturn in hours because of slumping demand. 'More tipped restaurant workers would lose their Medicaid than would gain small tax benefits. This is not the right solution,' Saru Jayaraman, founder of the advocacy group One Fair Wage told Al Jazeera. 'Why are these workers on Medicaid to begin with? Because they earn a sub-minimum wage and can't afford to take care of themselves.' SNAP benefits face a similar threat. The Center on Budget and Policy Priorities, a left-leaning think tank, forecasts that the tax bill could lead to as many as 11 million people, including restaurant workers, losing access to critical benefits. The House bill would cut $300bn from SNAP over the next 10 years and the Senate bill would cut $211bn. 'Those cuts have to come out of benefits or eligibility. There is just no way that cuts to administrative costs, to streamline waste, fraud, and abuse, or whatever the talking points are about thinking. Those are benefits to eligible people. To achieve that kind of savings, you have to cut benefits to people. There's no way around it. And that's devastating,' Ed Bolen, director of SNAP State Strategies at Center on Budget and Policy Priorities, told Al Jazeera. Nationwide, 18 percent of restaurant workers rely on SNAP benefits, including Ordenana. 'How am I going to eat? How am I gonna survive? How am I going to pay rent? And then on top of that, I might lose benefits? How is this happening in America?' Ordenana asked rhetorically.
Yahoo
01-07-2025
- Business
- Yahoo
How ‘No Tax on Tips' Could Affect You as Both a Server and a Customer
The Trump administration's 'No Tax on Tips' proposal would do more than make all tips income tax-exempt for servers. While this tax proposal promises to benefit servers, it's more complex than that. Read Next: Learn More: Here's a breakdown of the proposal and how it could impact servers and customers. Also see four types of people who will get money back from President Donald Trump's new tax initiatives. The No Tax on Tips Act, a standalone bill endorsed by both President Donald Trump and former Vice President Kamala Harris, would give tipped workers a tax break on gratuities of up to $25,000 from federal income tax. Currently, it is being incorporated into the 'One, Big, Beautiful Bill' being negotiated by Congress. Under the original proposal, only cash tips that are reported to the employer for payroll tax purposes would qualify for the deduction. Workers earning more than $160,000 per year would not be eligible, and the deduction would not apply to payroll taxes or state income taxes unless states follow suit. The bill also includes an expansion of the business tax credit for employers. This would allow them to claim a credit on payroll taxes for tips received in beauty services establishments, such as hairstyling, nail care and spa services, not just food and beverage service. Check Out: Under current law, every tip — cash, credit, debit or via the business's electronic payment system — must be reported as income no matter the amount. According to The New York Times, tipped workers would see more money in their wallets, but there's debate over who would benefit the most from the measure. Supporters have called the proposal a 'lifeline' that would provide some financial relief for servers who depend on gratuities to make ends meet, according to the Economic Policy Institute. However, critics argue that it could backfire, and it would help very few workers. Citing data from the Brookings Institution, the Economic Policy Institute pointed out that 37% of tipped workers don't earn enough to pay federal income tax, and could even lose income, as they could lose eligibility to important tax credits, like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The policy could also give employers cover to avoid raising base wages, especially in industries still using the federal tipped minimum wage of $2.13 an hour, unchanged since 1993, the Economic Policy Institute reported. While many states have increased their minimums, some still allow wages far below the standard. At a quick glance, the No Tax on Tips Act may seem to affect only workers and employers, but customers could experience changes in tipping culture. One potential outcome is the continued expansion and backlash around tipping norms. The Education Policy Institute estimated that this tip-prompting from employers could accelerate. More service industries could adopt this approach and may expect a voluntary tip at the end of the transaction. Rising prices and growing prompts for tips in quick-service businesses like coffee shops and fast-food chains have led to 'tip fatigue.' According to The Wall Street Journal, 38% of consumers reported tipping restaurant servers 20% or more in 2024, citing data from restaurant technology company Popmenu. That's down from 56% in 2021. Americans also went to restaurants less in 2024 than in 2023. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 I'm a Retired Boomer: 6 Bills I Canceled This Year That Were a Waste of Money 10 Used Cars That Will Last Longer Than an Average New Vehicle This article originally appeared on How 'No Tax on Tips' Could Affect You as Both a Server and a Customer
