Bill · H.R. 558· House(119-HR-558)
Tip Tax Termination Act
- Introduced
- 1/20/2025
- Last activity
- 1/20/2025 — Referred to the House Committee on Ways and Means.
- Sponsored by
- Don Bacon
- Cosponsors
- None
- Introduced
- In Committee
What this bill would do
The Tip Tax Termination Act aims to amend the Internal Revenue Code of 1986. It proposes that certain tipped wages will not be subject to income taxes for a specific period. This exclusion applies to eligible tips up to $20,000 per taxable year. Eligible tips include amounts from positions that generally rely on tips, such as food service, hospitality, and cosmetology. This provision is set to expire after December 31, 2029. The changes would apply to amounts received after December 31, 2024.
Yes· 3 of 5
Would households on low incomes be better off under this?+5
The bill provides a direct tax benefit to workers in service-oriented roles like food service and cosmetology who often rely on tips.
Does this cut taxes for middle-income families?+5
The bill allows workers in service industries to exclude up to $20,000 of tipped income from their taxable gross income.
Would middle-income households be better off under this?+3
The bill reduces the tax burden for service workers earning up to $20,000 in tips.
The opposite
Does this reduce what the federal government spends?-2
The tax exclusion reduces federal revenue through lower income tax collections.
Who it would affect, and how
Potential Positive Impacts for People
-
Tax Exclusion on Tips: Individuals in positions like food service, hospitality, and cosmetology can exclude up to $20,000 of their eligible tips from gross income (Section 2(a)).
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Credit Retention: The amount excluded from gross income can still be taken into account when determining the child tax credit and earned income credit (Section 2(a)(c)(2)).
Potential Negative Impacts for People
-
Limited Exclusion Amount: The exclusion from gross income is capped at $20,000 of eligible tips (Section 2(a)(a)).
-
Expiration of Benefits: The provisions of this section will not apply to tips received after December 31, 2029 (Section 2(a)(d)).
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Deduction and Credit Restrictions: Generally, any amount excluded from gross income under this section cannot be used to determine any deduction or credit under the chapter, except for the specific exceptions for child tax credit and earned income credit (Section 2(a)(c)(1)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For Low Income Households+5Good For Middle Class Households+3Good For Women+2
- Economy And Finance
- Reduces Middle Class Taxes+5Reduces Government Spending-2
- Social Issues And Justice
- Improves Poverty Reduction+3
- 1/20/2025
- Referred to the House Committee on Ways and Means.
- Introduced in House