Yeah, the left is all for the middle/lower class hard working people!!! 😂
https://x.com/laralogan/status/2007910675319021863?s=46&t=nLWTarDKWNHMqYhTVD-LQQ
The "no tax on tips" policy, enacted in July 2025 as a temporary federal income tax deduction, benefits some workers by increasing their take-home pay, but it does not help the lowest-income earners and has potential negative long-term impacts.
How the Policy Works
The provision is a tax deduction, not a complete elimination of tip taxes.
Federal Income Tax Deduction: Eligible workers can deduct up to $25,000 of qualified tips annually from their federal taxable income for the 2025 through 2028 tax years. The deduction phases out for single filers with a modified adjusted gross income over $150,000 (or $300,000 for married couples filing jointly).
Still Subject to Payroll Taxes: Tips remain subject to federal payroll taxes for Social Security and Medicare, as well as state and local income taxes.
Eligibility: Only tips reported on an IRS Form W-2 or 1099 from eligible occupations qualify for the deduction.
Impact on Workers
Potential Benefits
Increased Take-Home Pay: Workers who earn enough to have a federal income tax liability and fall within the income limits will see an increase in their take-home pay.
Modest Tax Savings: For those who benefit, the average tax cut is estimated to be around $1,800 a year.
Potential Drawbacks and Criticisms
Excludes Lowest Earners: Workers with very low total incomes often pay little to no federal income tax already due to the standard deduction and tax credits, so the tip deduction offers them no or minimal benefit.
Potential Wage Stagnation: Critics argue that the policy may reduce pressure on employers to raise base wages for tipped workers, as the tax break could be used as justification to keep wages low.
Impact on Benefits: Some workers might see a reduction in benefits such as the Earned Income Tax Credit.
Fairness Concerns: The deduction gives preferential tax treatment to tipped workers over non-tipped workers with similar incomes and disproportionately benefits higher earners within the tipped workforce (e.g., in high-end restaurants vs. lower-end diners).Employer Incentive: The policy may incentivize businesses to expand the use of tipped work, potentially leading to consumers being asked to tip in more scenarios, effectively making customers subsidize employer payrolls.