The Treasury Department on Friday released its proposal regarding tax relief on tips, one of Donald Trump's key promises in the 2024 campaign, including new prohibitions against tips collected in connection with "illegal activity, prostitution services, or pornographic activity."
The tips provision has been central to Republican efforts to pitch Trump's $3.4 trillion tax legislation, which polls have found to be unpopular, as a gift to the American working class.
The proposal hews closely to the informal list that the Treasury released earlier this month but adds new restrictions for online content creators and other lines of work.
The proposal, which still must go through the formal notice and comment process, extends deductions of as much as $25,000 to dozens of positions, including restaurant workers, drivers, cosmetologists, dancers, event DJs and golf caddies. The deduction starts to phase out for taxpayers making more than $150,000 a year and fully cuts off for those making at least $400,000.
The guidance also includes jobs less commonly associated with tips that were on an earlier informal list, such as home repair and digital content creation, but
The tax cut, in effect from now until the end of 2028, will cost an estimated $32 billion in forgone tax revenues, according to Congress's nonpartisan Joint Committee on Taxation.
