Secure Your Chances of Getting the New Tip Tax Break With This Expert's Advice

Core Insights - A new tax deduction for tips allows workers to subtract up to $25,000 of tips earned in 2025 from their taxable income, potentially lowering their tax bills significantly [2][8] Group 1: Tax Deduction Details - The new tax deduction is part of the "One Big, Beautiful Bill" Act, aimed at benefiting workers who receive gratuities [2] - Workers must keep records of their tips, as the IRS requires reporting if tips exceed $20 a month [3] - The IRS will not update W-2 forms to reflect this new deduction, meaning workers will need to calculate their tips independently [4][9] Group 2: Implications for Workers - Approximately 6 million workers report tipped wages, and this deduction is expected to lower their annual tax bills [5] - The deduction does not require itemization, simplifying the tax filing process for workers [6] - There are restrictions based on total income and filing status; for instance, married individuals filing separately cannot claim this deduction [7]