No Tax on Tips - House Versus Senate Differences

No tax on tips was passed by both the House and Senate. However, each version is different.

Here are the comparisons

Senate Version caps benefit at $25,000 (House unlimited)

Senate Version tips need to be reported to employer (House no)

Both versions are retroactive to January 1 but House expires 2028. Senate is a permanent provision.

House bill defines tips more restrictively. “must be paid voluntarily without any consequence if nonpayment, is not subject to negotiation, and is determined by the payor.” Therefore mandatory tips don’t apply.

House bill allows independent contractors to qualify (Senate no)