Core Points - The U.S. Department of the Treasury and the IRS issued guidance allowing more workers to benefit from "no tax on tips" and "no tax on overtime" provisions under President Trump's legislation [1] - The 2025 budget reconciliation bill permits workers to deduct up to $25,000 in tips and $12,500 in overtime from their income, with exemptions for certain specified service trades [2] - Additional guidance is deemed necessary to help determine if an employer's business qualifies as a specified service trade [3] Summary by Sections - **Transition Relief**: The guidance provides "transition relief" until January 1 of the first calendar year after final rules are issued, recognizing that many small businesses have not previously made such determinations [4] - **Penalty Relief**: Employers are granted penalty relief for tax year 2025 regarding the provision of correct information on qualified tips and overtime compensation [4] - **Tax Forms Update**: The IRS has not updated tax forms for 2025 and encourages employers to provide tipped employees with occupation codes and separate accounting of cash tips [5] - **Implementation Preparation**: Employers should prepare for the implementation of these provisions, despite the easing of the law [6] - **Reporting Requirements**: Employers are advised to provide employees with reports detailing cash tips, qualifying occupations, and qualified overtime compensation, especially for accurate calculations in tax year 2026 [7]

Core Points - The U.S. Treasury Department has released a preliminary list of 68 occupations eligible for a tax deduction on tips as part of the One Big Beautiful Bill Act, which will take effect on or before December 31, 2024 [1][5] - The list includes a wide range of occupations beyond traditional service roles, such as podcasters, social media influencers, and house painters, indicating an expansion of the tipping culture in the U.S. [1][2][5] - The new tax break on tips is retroactive for eligible income earned in 2025, allowing workers to deduct up to $25,000 in tips per return, which can significantly reduce taxable income [13][14] Group 1: Eligible Occupations - The preliminary list includes various roles such as pastry chefs, food preparation workers, bartenders, tow truck drivers, tattoo artists, and yoga instructors, highlighting the broadening scope of who qualifies for the tax deduction [2][5][9] - Notably, some occupations traditionally associated with tips, like lawyers, are excluded from the list, as they do not receive tips as part of their payment [6][9] Group 2: Tax Deduction Details - The deduction applies only to voluntary tips, meaning mandatory service charges, such as those automatically added to restaurant bills, are not eligible for the tax break [10][11][12] - Taxpayers must report all tips to their employers if they total $20 or more in a single month, and employers are still required to withhold taxes for Social Security and Medicare [15][16] - The deduction phases out for higher-income earners, with specific thresholds set at $150,000 for single filers and $300,000 for married couples filing jointly, completely phasing out at $400,000 and $550,000, respectively [16]

Some buyers can qualify for a new tax deduction on car loan interest for U.S.-assembled vehicles, but it is less generous and harder to estimate than an expiring EV tax credit https://t.co/MOhtaB6hRq ...