Creates a federal income tax deduction of up to $25,000 for cash tips received by workers in occupations that traditionally received tips, and extends the employer payroll tax credit for tips to beauty service businesses.

• Allows a deduction of up to $25,000 for qualified cash tips, available to taxpayers who take the standard deduction and to those who itemize.
• Limits qualified tips to occupations that traditionally and customarily received tips on or before December 31, 2023, as listed by the Treasury Secretary.
• Requires the Treasury Secretary to publish that occupation list within 90 days of enactment and to adjust federal income tax withholding tables for the deduction.
• Excludes employees whose compensation from the same employer in the prior year exceeded the threshold in section 414(q).
• Extends the employer Social Security tax credit for tips under section 45B to barbering and hair care, nail care, esthetics, and body and spa treatments.
• Applies to taxable years beginning after December 31, 2024.

• Finance Committee (Senate)

Taxation