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PSA: the "No Tax On Tips" provision expires: > New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tip
by throw0101a 1y ago
PSA: the "No Tax On Tips" provision expires:
> New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.
* https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-...
There's also a maximum of $25k/year (~$2k/mo).
- jagged-chisel 1y agoIs that maximum $25k in tips, or in total income that includes tips?
- rayiner 1y agoTips. The AGI phaseout starts at 150k (300 married).
- fn-mote 1y ago300k before your tips start to become taxable?? What in the world is driving this very high ceiling?
- deleted 1y ago[deleted]
- rayiner 1y agoThat’s a typical phase-out threshold for dedications.
- cebert 1y ago300k isn’t what it used to be these days with inflation and cost of living. If you have kids and a house, things get expensive quickly.
- vasco 1y agoGet real, look at some statistics, that's more than 3x median
- dingnuts 1y ago[flagged]
- CalRobert 1y agoYes, it was Ferrari money and now it’s just Porsche money. Poor things.
- hiatus 1y agoThis is the problem when talking about class warfare. We are eating our own. Someone making $300k a year is closer to the median than someone making $5 million a year. Losing ~30% of your spending power since 2008 might not matter if you're a billionaire but for most working professionals it has an impact.
- CalRobert 1y agoYou make a good point - lumping people who make 500k a year with those making 5 million (or 50 million) a year is bad policy. It's still a very good income, though.
- ashdksnndck 1y agoRich people are more likely to pay accountants to come up with complicated ways to exploit the tax system. If the top 5% had access to this loophole, you’d probably end up with some crazy outcome like 80% of money saved from this deduction goes to the top 5% of earners. And that would make the provision more expensive to include in tax legislation (trading off against other things like the headline tax rate). Since “no tax on tips” was a campaign promise, they probably wanted to keep the promise while setting limits to make it easier to fit into the rest of the bill.
- tdeck 1y agoThey won't pay accountants, they'll tip them!
- jagged-chisel 1y agoOnly if the accountant’s accountant recommends receiving tips
- Frieren 1y agoKids of rich people now can exploit this loophole. They can get up to 300k from some fake job and do not pay any taxes on the "tips" part of it. Each month the tips part is going, oh surprise, going to be the maximum allowed by law.
- itake 1y agoIn tips
- throwawayq3423 1y agoRight on time for them to lose the next election so people blame Democrats. It's all so cynical.
- theultdev 1y agoIf Democrats win they could extend them
- brendoelfrendo 1y agoIf Democrats win the presidency, they would still probably need cooperation from Republicans to get an extension through Congress, which means that there are no good options for the Dems.
- throw0101d 1y ago> If Democrats win they could extend them And what happens to the debt/deficit then? You know, the thing that the GOP constantly complains about but always makes worse? The GOP loves to cut revenues (taxes, especially for top percentiles): * https://en.wikipedia.org/wiki/Starve_the_beast https://en.wikipedia.org/wiki/Starve_the_beast
- throwawayq3423 1y agoThey love to cut revenues and explode the debt. "The party of fiscal responsibility."
- estearum 1y agobut it's a very stupid policy.
- kimbernator 1y agoYes but this policy is absolutely terrible, so it seems unlikely they would
- deleted 1y ago[deleted]
- cyanydeez 1y agoIt's a free tax fraud for everyone! hooray!
- japanuspus 1y ago> PSA: the "No Tax On Tips" provision expires... My understanding is that this is true for all the Trump handouts: otherwise the ten-year economic outlooks would have cratered. The Economist had a couple of nice analyses on this. Of course this means that the next administration will need to start with tax increases just to get to neutral, but maybe that is a feature?
- overfeed 1y ago> My understanding is that this is true for all the Trump handouts Only those for humans expire. The corporate tax cuts are forever. Read into that what you will.
- zimpenfish 1y ago> true for all the Trump handouts: otherwise the ten-year economic outlooks would have cratered Not just that - they're often timed to expire early into the next administration which, if Democrats win, is an instant "look how the Democrats treat the working folk!" hammer. e.g. "Tax Cuts and Jobs Act" from 2017, expiring at the end of 2025[0]. [0] https://theconversation.com/trumps-plans-to-extend-tax-cuts-and-slash-red-tape-will-likely-spur-economic-growth-but-theres-a-cost-242733 https://theconversation.com/trumps-plans-to-extend-tax-cuts-...
- ahoka 1y agoThe Republican strategy is to booby trap the US economy every time they are in power since Reagan.
- rayiner 1y ago