From Yahoo Finance: 2025-05-22 12:09:00

The U.S. House passed a sweeping tax bill that could temporarily eliminate taxes on tips, despite opposition from Democrats and some Republicans. A recent poll showed nearly 75% of Americans support this provision, but critics argue it would mainly benefit higher-income earners. The bill is estimated to cost $40 billion over four years.

The tax bill would provide a temporary tax deduction for employees and independent contractors in tip-receiving occupations, excluding highly compensated workers. While the proposal has received mixed reactions, some experts believe it may not benefit a significant number of workers, especially those at the lower end of the income distribution.

A separate bill, the “No Tax on Tips Act,” was passed by the Senate, offering a new tax deduction on cash tips worth up to $25,000. Highly compensated employees would not be eligible for this deduction. The fate of the “no tax on tips” provision in the Republican tax bill will depend on the House’s decision.

Republicans’ tax bill faces scrutiny as it heads to the Senate, where changes are expected. If both chambers can agree on the details, the bill will go to Trump for final approval. Trump has urged the Senate to act swiftly, emphasizing the importance of passing the bill.

Read more: House passes tax pill, including ‘no tax on tips’ provision. How much will workers save?