"No Tax on Tips" Bill Overview - The "No Tax on Tips" provision in the "One Big Beautiful Bill" allows tipped employees to deduct up to $25,000 from their federal tax filing each year, starting in 2025 and lasting through 2028 [1][6] - Individuals earning $150,000 or joint filers earning $300,000 are disqualified from this deduction [6] - The IRS has provided penalty relief for the tax year 2025 as taxpayers adjust to the new policy [9] Potential Benefits - The provision is projected to increase average take-home pay for tipped workers by $1,300 per year [2] - Small businesses may benefit from improved employee retention, as replacing a tipped employee is estimated to cost around $8,000 [14][15][16] - Nevada, with approximately 25% of its workforce in tipped jobs, stands to benefit significantly [11][12][13] Criticisms and Concerns - 37% of tipped workers may not benefit as they already face zero federal income tax burden [4] - Low-income households may not benefit and could be negatively impacted by Medicaid and other social services cuts associated with the bill [5] - The policy exacerbates the existing tipping system, which is viewed negatively by nearly 90% of Americans who believe tipping has gotten out of control [3][4] - Experts argue that the bill creates unequal tax treatment compared to other professions [17] - The policy excludes auto gratuities and service charges, which could be shared with the entire staff, not just customer-facing employees [26][27] Alternative Solutions - Some suggest increasing the minimum wage to provide more stable earnings for low-income workers [20] - Eliminating the subminimum wage is proposed as a way to address wage inequality [22] - Innovative pay models, including auto gratuities and service charges, are being explored to ensure fair wages while allowing businesses to thrive [25][26]