I 

118TH CONGRESS 

2D SESSION H. R. 7870 

To amend the Internal Revenue Code of 1986 to provide that certain tips 

shall not be subject to income or employment taxes for a period of 5 years. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 5, 2024 

Mr. BACON introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

that certain tips shall not be subject to income or employment taxes for a period of 5 years. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Tip Tax Termination 

5 Act’’. 

6 SEC. 2. EXCLUSION FROM GROSS INCOME OF CERTAIN 

7 TIPPED WAGES. 

8 (a) IN GENERAL.—Part III of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 is amended 

10 by inserting after section 139I the following new section: 


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1 ‘‘SEC. 139J. CERTAIN TIPPED WAGES. 

2 ‘‘(a) IN GENERAL.—Gross income shall not include 

3 so much of the eligible tips received by an individual dur4 ing the taxable year as does not exceed $20,000. 

5 ‘‘(b) ELIGIBLE TIPS.—For purposes of this section, 

6 the term ‘eligible tips’ means amounts received while per7 forming services which constitute employment in a posi8 tion which generally relies on tips as part of wages, includ9 ing cosmetology, hospitality, and food service. 

10 ‘‘(c) DENIAL OF DOUBLE BENEFIT.— 

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graph (2), any amount which is excluded from gross 

13 income under this section shall not be taken into ac14 count in determining any deduction or credit under 

15 this chapter. 

16 ‘‘(2) EXCEPTION FOR CHILD TAX CREDIT; 

17 EARNED INCOME CREDIT.—The amount excluded 

18 from gross income under this section shall be taken 

19 into account for purposes of determining the credits 

20 under sections 24 and 32. 

21 ‘‘(d) TERMINATION.—This section shall not apply to 

22 tips received after December 31, 2028.’’. 

23 (b) APPLICATION TO EMPLOYMENT TAXES.— 

24 (1) SOCIAL SECURITY TAXES.— 

25 (A) IN GENERAL.—Section 3121(a)(12) of 

26 such Code is amended by striking— 


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1 ‘‘(A) tips’’ and inserting ‘‘Except as pro2 vided in section 139J— 

3 ‘‘(A) tips’’. 

4 (B) TRUST FUNDS HELD HARMLESS.— 

5 There are hereby appropriated to the Federal 

6 Old-Age and Survivors Insurance Trust Fund, 

7 the Federal Disability Insurance Trust Fund, 

8 and the Federal Hospital Insurance Trust 

9 Fund amounts equivalent to the reduction in 

10 revenues to each such Trust Fund, respectively, 

11 by reason of the amendment made by subpara12 graph (A) (determined without regard to this 

13 subparagraph). Amounts appropriated by the 

14 preceding sentence shall be transferred from the 

15 general fund at such times and in such manner 

16 as to replicate to the extent possible the trans17 fers which would have occurred to such Trust 

18 Fund had this section not been enacted. 

19 (2) UNEMPLOYMENT TAXES.—Section 3306(s) 

20 of such Code is amended by striking ‘‘For purposes 

21 of this chapter’’ and inserting ‘‘Except as provided 

22 in section 139J, for purposes of this chapter,’’. 

23 (3) WAGE WITHHOLDING.—Section 3401(a)(16) 

24 of such Code is amended by striking— 


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1 ‘‘(A) tips’’ and inserting ‘‘Except as pro2 vided in section 139J— 

3 ‘‘(A) tips’’. 

4 (c) CLERICAL AMENDMENT.—The table of sections 

5 for part III of subchapter B of chapter 1 of such Code 

6 is amended by inserting after the item relating to section 

7 139I the following new item: 

‘‘Sec. 139J. Certain tipped wages.’’. 

8 (d) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to amounts received after Decem10 ber 31, 2023. 

Æ 


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