No Tax on Tips Act – What Biden’s Proposal Means for Workers in 2025
The No Tax on Tips Act is making headlines across the U.S., after President Biden announced his intention to eliminate federal taxes on tips received by service workers. As the topic continues trending online, many people are asking: What is the No Tax on Tips Act, who benefits from it, and how would it change tipping culture in America?
💵 What Is the No Tax on Tips Act?
Introduced in May 2025, the No Tax on Tips Act is a legislative proposal that would exempt tipped income (like those received by restaurant servers, bartenders, and delivery drivers) from federal income taxes. The goal is to support low-wage service workers by allowing them to keep 100% of their hard-earned tips.
Currently, tips are considered taxable income and must be reported to the IRS. Employers are also required to withhold Social Security and Medicare taxes. This bill would change that – for good.
👩🍳 Who Would Benefit from the New Law?
The No Tax on Tips initiative is expected to impact millions of workers in the service sector. According to the Bureau of Labor Statistics, over 4 million workers in the U.S. rely on tips for a major portion of their income.
- Restaurant servers and waitstaff
- Bartenders and baristas
- Food delivery drivers
- Hotel bellhops and valets
By removing taxes on this portion of their income, these workers could see their take-home pay increase by 10% or more annually.
⚖️ Why Is It Controversial?
While many celebrate the idea, critics say it could create loopholes and make income tracking harder. Concerns include:
- Loss of federal tax revenue
- Uneven benefits (e.g., higher tips = more gain)
- Potential for unreported earnings and abuse
Still, public sentiment seems supportive, especially among younger generations who favor progressive labor reforms.
🍽 A Quick Look at U.S. Tipping Culture
To understand the context of the No Tax on Tips Act, it helps to know how tipping works in the U.S. Unlike many other countries, tipping in America is not optional – it’s expected. In many states, the tipped minimum wage is as low as $2.13/hour, with tips making up the difference.
This system has long been debated, and Biden’s proposal reignites that conversation with a bold tax-focused approach.
📊 How Much Money Could Workers Save?
If the No Tax on Tips Act becomes law, tipped workers earning $200 in tips weekly could save over $1,000 per year in federal income tax.
| Weekly Tips | Estimated Annual Tip Income | Estimated Tax Saved |
|---|---|---|
| $100 | $5,200 | ~$520 |
| $200 | $10,400 | ~$1,040 |
| $300 | $15,600 | ~$1,560 |
🧠 Final Thoughts: Is This the Future of Fair Pay?
The No Tax on Tips Act could be one of the most meaningful reforms for service workers in decades. It challenges how we define taxable income and how we value labor in the U.S.
Whether it becomes law or not, it has already ignited a powerful conversation about fairness, income, and dignity in the workplace.
Would you support the No Tax on Tips Act? Share your thoughts below.
