Are tips taxable? Here's how the new 'no tax on tips' deduction works.

For millions of service workers, the promise of “no tax on tips” sounds like a straight boost to your paycheck. But the reality is more nuanced than the slogan popularized by President Trump suggests. This new federal income tax deduction comes with strict income caps, reporting rules, and eligibility requirements. With the 2026 filing season in full swing, here’s everything you need to know about the new tax rule. What does 'no tax on tips' actually mean? Technically speaking, "no tax on tips" is a fe ...