Reasons your paycheck stays similar despite no tip tax
The article explains that the "no tax on tips" policy for eligible workers is a federal income tax deduction, not an exemption, and has not yet significantly affected workers’ paychecks. While over 7.5 million filers claimed an average deduction of $7,000, tips still undergo Social Security, Medicare, and some state and local taxes. The deduction, which is set to expire in 2028 unless extended, only applies to certain jobs that "customarily and regularly" received tips before the end of 2024 and only to qualified, voluntary cash or tip-sharing tips.
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