Trevor Sikes & A.J. Collins, Check, Please: Workers React to ‘No Tax on Tips’ One Year In (Tax Analysts, 2026 TNTF 127-4)
The qualified tips deduction, known as “No Tax on Tips,” has been touted by the Trump administration as a win for middle-income Americans, but some tipped workers told Tax Notes that the provision didn’t provide the tax relief they expected this year.
Messaging around the tax deduction, inspired by President Trump’s campaign pledge to eliminate taxes on tips, misled some workers about how it would work. Confusion about what kinds of tips qualified and differences between federal and state tax codes also left people underwhelmed.
But introducing a directed education initiative and clear guidance examples about the deduction tha are aimed at tipped workers could go a long way in resolving confusion and alleviating many of the headaches that taxpayers, employers, and tax professionals face, according to observers.
The qualified tips deduction under section 224, enacted by the One Big Beautiful Bill Act and set to expire in 2028, allows single filers who earn up to $150,000 and joint filers who earn up to $300,000 to deduct up to $25,000 in cash tips that are voluntarily paid to the worker.
Over 7.5 million filers claimed the tips deduction, with an average deduction of more than $7,000, Treasury said. The figures from the 2026 tax filing season show an overall increase in the average refund amount received and the total number of refunds given as compared to last year’s filing season….
