Americans who work for a living just got a real win. The new tax measure signed into law this past July creates a targeted tax break that lets many tipped workers exclude up to $25,000 in tips from federal income taxes, a relief President Trump loudly championed as part of his broader tax package.
Here’s how it works in practice: eligible workers can deduct up to $25,000 in “qualified tips” for tax years 2025 through 2028, and the benefit phases out for higher earners — protecting middle- and lower-income Americans while preventing windfalls for the wealthy. The exemption applies only to federal income tax; payroll levies and state taxes still apply, so this isn’t a magic erasure of all deductions but a meaningful boost to take-home pay for millions.
The Treasury has moved quickly to clarify who qualifies, publishing a preliminary list of traditionally tipped occupations so hard-working servers, delivery drivers, stylists, and others know they’re covered. Officials also made clear that tips must be voluntary to count — automatic gratuities don’t qualify — which keeps the benefit focused on genuine gratuities from customers rather than employer-mandated charges.
Make no mistake: this is common-sense tax relief for people who earn money the old-fashioned way — by serving others — and conservatives should celebrate it. For too long policy has favored abstract economic theories and Washington paperwork over the simple dignity of a paycheck, and returning more of that money to the worker’s pocket is the kind of practical reform Americans understand and deserve.
Of course the usual chorus from Washington and academia whines about budgetary costs and unintended consequences, warning the measure could add billions to projected deficits and might complicate wage reporting. Those are fair implementation concerns that deserve clear rules, not reflexive opposition; if critics cared about workers they’d propose ways to simplify reporting and verify tips without stripping this relief away.
Now the work shifts to common-sense implementation: finish the Treasury guidance, cut red tape, and make sure employers and workers have a straightforward path to claim the benefit. Conservatives should push to turn this into permanent relief, roll back burdensome payroll taxes that still eat tips, and keep fighting for policies that reward honest work and keep more of Americans’ earnings in their hands.
