One of Donald Trump’s big promises to the people of Nevada on the campaign trail was ending taxes on tips. With the passage of his new megabill on Friday, many people celebrated the inclusion of the pre-election vow.
people will have to pay income tax on any tips earned over $25,000
It was only through reading the fine print that hospitality workers realized that it wasn’t an all-inclusive exemption from taxes. People will have to pay income tax on any tips earned over $25,000, as well as Medicare and Social Security taxes on the initial $25,000.
Despite the cap on the untaxable earnings, some people in the service industry stand to save thousands per year with the new measure. The law takes effect for the 2025 tax year.
If future lawmakers don’t extend the tax cuts, the exemption will vanish after 2028. Talking about the passage of the bill, a Resorts World Las Vegas barista told the Wall Street Journal that the savings will help her when purchasing groceries and gas. Others welcomed the measure, while still saying that the $25,000 cap was “frustrating.”
