No Tax on Tips Act

HR 8941, the "No Tax on Tips Act," creates a new tax deduction for workers who receive cash tips. It allows employees to deduct the full amount of cash tips they report to their employer (via statements required under tax law) from their taxable income, reducing their overall tax burden. This deduction applies to both itemizing and non-itemizing taxpayers and is exempt from standard limitations on miscellaneous deductions. The provision takes effect for taxable years beginning after December 31, 2024, directly benefiting service industry workers like servers and bartenders who rely on cash tips.