Gordon Logan on No Tax on Tips: A Game‑Changing Break for Our Industry?
Founder and Chairman Gordon Logan shares his exciting views on what the No Tax on Tips Act can mean for Team Members.
No Tax on Tips: A Game‑Changing Break for Service Workers?
In a stunning bipartisan move, Congress passed—and President Trump signed—the One Big Beautiful Bill Act on July 4, 2025. Central to this massive legislative package is the No Tax on Tips Act, introduced by Senator Ted Cruz (R‑TX) and unanimously approved in the Senate on May 20, 2025 (politifact).
What Does It Do?
Starting with the 2025 tax year, eligible service workers can deduct up to $25,000 of reported cash tips from their federal taxable income—no questions asked (Kiplinger). The benefit phases out for individuals earning over $150,000 and joint filers over $300,000, and is available whether you standard‑ or itemize (Kiplinger). Qualifying occupations include servers, bartenders, delivery drivers, hair stylists, and others in traditionally tipped roles as of December 31, 2023 (Kiplinger).
Temporary but Timely
This deduction applies retroactively to income earned in 2025, but only through December 31, 2028, unless Congress extends it (ogletree).
Employer Implications
Employers must report tip income and occupations on W‑2s, with the Treasury Department issuing clear IRS guidelines soon on acceptable reporting practices (Littler Mendelson P.C.).
Praise & Pushback
Supporters—including the National Restaurant Association—view the measure as a victory for working families, estimating average annual gains of around $1,300 for tip‑dependent workers (The White House). However, critics argue the provision is a temporary fix, benefiting those already paying little federal income tax, and could let employers justify low base wages or encourage expanded tipping into untipped jobs.(AP News).
In short, the No Tax on Tips Act delivers meaningful tax relief to tipped workers, but it's a short‑term and imperfect measure. Whether it ushers in fairer wages or unintended wage discrimination hinges on how it's put into action—and whether future Congresses renew it beyond 2028.