“No Tax on Tips” Includes Digital Creators, Too

[throw0101a]

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-...

There's also a maximum of $25k/year (~$2k/mo).

[japanuspus]

> 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?

[jagged-chisel]

Is that maximum $25k in tips, or in total income that includes tips?

[throwawayq3423]

Right on time for them to lose the next election so people blame Democrats.

It's all so cynical.

[cyanydeez]

It's a free tax fraud for everyone! hooray!

[billpg]

"Would you like to leave a tip for your server?" "20%."

"And the cook?" "What?"

"The cook wants in on the no-tax-on-tips so we're asking how much you'd like to tip him. We're also going to ask for the cleaner and the guy who delivered the ingredients earlier this morning."

[sebtron]

If you think this is absurd, this is how I feel, coming from a non-tipping country, when I read about the tipping culture in the US.

[gommm]

To be fair, tipping the cook makes more sense to me than the waiter. I come to a restaurant for the food, I don't particularly care about the service beyond a certain baseline. It never makes sense to me that waiters can earn more with tips than kitchen staff.

[dugmartin]

In the US, the cook and busboys and other support staff normally also receive tips as part of the "tipping out" system where the servers split part of their tips. It is voluntary but not really - if you, as a server, don't tip out your tables start not getting their food as fast and the table isn't turned as fast.

[Folcon]

I have a question for the American's in the audience here.

There's always this narrative about tipping allowing for exceptional service and I wanted to know what meta advantages or options have you been given or seen as a result of this?

I'm reminded by Charlie Sheen's character in two and a half men consistently tipping the pizza delivery driver who brings him a champagne bottle with his pizza.

As a comparison elsewhere, I've had French wait staff bring me bread at the table whenever I visit Paris and even if the restaurant is out they source it from nearby restaurants unprompted with no expectation of a tip even though I would perceive that as being above and beyond service.

I'm trying to understand if we're all on the same page about great and even exceptional service :)

[bitshiftfaced]

I don't like the idea of even more expectations for tips, since we're already tip-fatigued. Despite that, I'd rather have less rules and taxes and have them actually enforced than have a situation where people pocket the cash portion of their tips untaxed anyway, which only punishes honest people.

[RankingMember]

It's pernicious. I've been to places that add "service charge" by default now to relieve tipping, then still give you the option to tip on top of that, which some people do because they think maybe the service charge isn't going to the server (in the places I've been to, it is). Tipping needs to die and it's frustrating to see it starting to proliferate in some European countries.

[thayne]

Yeah, this is going to incentivize businesses to try and make as much of their employees' pay come from tips, which means consumers will be expected to pay more tips, which is the opposite direction I want it to go.

[viraptor]

> since we're already tip-fatigued

Bluetti hit the "are you actually fucking serious?" level for me with the tips. They ask you for a % tip when you order online from them. No employee contact, no consultation. I just added a $2k item to the basket, tried to pay and got an invitation to tip extra.

[Rebelgecko]

I guess the good news is now we can ask the server their marginal tax rate and reduce our tips accordingly

[colechristensen]

I do like the idea of people doing stuff for free for the public benefit and asking quietly for tips on topic with the article re: "digital creators".

[junar]

I think one aspect that is understated: "No Tax on Tips" is only a deduction for the purposes of federal income tax. W-2 workers still owe FICA and other payroll taxes on such income, and similarly self-employed workers would still owe self-employment tax.

To me, a more appropriate name is "Some taxes on tips".

[onlyrealcuzzo]

And most of their tax is already at the state level or FICA, so it's more like, "most taxes on tips, unless you make decent money, then you bet a break."

But that's not winning an election.

[jollyllama]

$1 subscription, but "This content is only available for my top 1,000,000 fans" ranked by tips.

[aspenmayer]

Oooh, I like this. Reminds me of charity auctions.

[nicce]

I like the idea. How to implement in transparently in away you aren't always the 1,000,001 one?

[conductr]

I’m more concerned with no tip on taxes. Sales tax is usually in the subtotal that tip percentage are calculated on. Most POS I’ve seen do this way

[johncolanduoni]

Before someone is confused: POS here means “Point of Sale”, not “Piece of …”.

[richwater]

"No Tax On Tips" is so stupidly regressive and yet another addition to the complex tax law. Somehow we decided a waiter making 100k with tips needs more help than a stock worker at Walmart.

[hypeatei]

"no tax on tips" was a pandering move to the mostly financially-illiterate populace that still don't understand progressive tax systems. Singling out certain types of income makes no sense and is very unfair. I wouldn't be surprised if this actually ends up resulting in less tip income over the long term due to people going "wait my income is taxed but theirs isn't, why should I tip as much?"

[zupa-hu]

In my book, asking for a tip is called begging. A tip is voluntary.

[pcthrowaway]

> The act also provides that tips do not qualify for the deduction if they are received “in the course of certain specified trades or businesses — including the fields of health, performing arts, and athletics,”

So buskers have to declare their tips, but servers don't?

[b3ing]

So I can do a deal for $1 then ask someone to pay the other $100k in tips?

[romanovcode]

Close, but not really. 25k a year is the limit. So you could do a deal with $1 and $25k per year.

[Luker88]

Does the opposite movement exist?

Like "No Tips".

Pay your employees, pay your taxes.

No nonsense on dividing tips between people that I did not interact with, minimum tipping, or with automated machines.

Tipping also means that if I want to know how much I'll spend in your restaurant I will have to decide how much I tip even before I walk in.

This is all just tax evasion with extra steps, enabling exploiting of people that have less contractual power.

[tastyfreeze]

I used to try practicing no tips. I live in a state with no different tipping wage. To me that makes the argument of "they get paid nothing" impotent. But, culturally, people will perceive you as a prick for not tipping at restaurants. It's not fair and I don't like it but, that is the culture that has spread from tipping wage states.

Now that I have given up on that battle I do scale my tip for how good the service is.

[tredre3]

> No nonsense on dividing tips between people that I did not interact with

It is true that in some contexts, a good waiter elevates the experience. But in most restaurants the waiter adds nothing to my experience. If anything they're a hindrance. So I'm very much in favor of forced tip sharing with the people who actually made the food I enjoyed.

[codedokode]

> Does the opposite movement exist?

Japan?

[downrightmike]

Sort of, but they chose to outsource instead of paying people/taxes

[busymom0]

I use "tipping" in my Hacker News app Hack. Basically users can tip an amount they pick. Would such "no tax on tips" apply to that too?

[hshdhdhj4444]

No tax on tips is the kind of policy you’d come up with if you were creating a caricature of the far left.

And yet, in today’s America that’s the major economic policy of the leader of the Republican Party.

[EliRivers]

Okay, so if I had some employees working jobs that are part of this, could I give them a tip? Could I give them 25000 dollars of tax free tip.

[aspenmayer]

https://archive.is/8T9t0

[bilekas]

Great, another way companies can offload the responsibility of looking after their staff to the customer.

It sounds like a win for the employee, "ah but you don't need to pay tax on your tips". But in reality it's government saying "The company you work for owes you nothing, take it from the customer".

[gregjw]

Oh nice, congrats to all US digital creators.

[yunohn]

Truly bizarre how this is playing out - was the digital creator carve out requested by the various right wing streamers that are part of Trumps’s core sycophant club? Doesn’t make any sense.

[1oooqooq]

of course this administration did something that help sites like only fans.

[jedberg]

And Amazon (via Twitch).