Tip Tax Termination Act

Bill: 119-hr-558
Sponsor: full_name: Rep. Bacon, Don [R-NE-2]
Introduced: 2025-01-20
Policy area: Taxation
Latest action: action_date: 2025-01-20
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2025-01-20
action_desc: Introduced in House
text: <p><strong>Tip Tax Termination Act&nbsp;</strong></p><p>This bill excludes from gross income for federal&nbsp;tax purposes up to $20,000 of eligible tips received during the tax year.&nbsp;The bill also requires the Internal Revenue Service to modify the tables and procedures used to withhold federal income tax from wages to take into account eligible tips excluded from gross income.&nbsp;</p><p>The bill defines&nbsp;<em>eligible tips</em> as amounts received while performing services in a position that generally relies on tips as part of wages, including cosmetology, hospitality, and food service.</p><p>Further, under the bill, the amount of eligible tips excluded from gross income must not be included in determining federal tax deductions or credits, except for purposes of calculating the child tax credit and earned income tax credit.</p><p>Finally, the exclusion from gross income only applies to eligible tips received before 2030. </p>

tv_txt: I 119th CONGRESS 1st Session H. R. 558 IN THE HOUSE OF REPRESENTATIVES January 20, 2025 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 taxes for a period of 5 years.

1. Short title This Act may be cited as the Tip Tax Termination Act . 2. Exclusion from gross income of certain tipped wages (a) In general Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section: 139J. Certain tipped wages (a) In general Gross income shall not include so much of the eligible tips received by an individual during the taxable year as does not exceed $20,000. (b) Eligible tips For purposes of this section, the term eligible tips means amounts received while performing services which constitute employment in a position which generally relies on tips as part of wages, including cosmetology, hospitality, and food service. (c) Denial of double benefit (1) In general Except as provided in paragraph (2), any amount which is excluded from gross income under this section shall not be taken into account in determining any deduction or credit under this chapter. (2) Exception for child tax credit; earned income credit The amount excluded from gross income under this section shall be taken into account for purposes of determining the credits under sections 24 and 32. (d) Termination This section shall not apply to tips received after December 31, 2029. . (b) Withholding The Secretary of the Treasury (or the Secretary’s delegate) shall modify the tables and procedures prescribed under section 3402(a) of the Internal Revenue Code of 1986 to take into account amounts excludible from gross income under section 139J of such Code (as added by this Act). (c) Clerical amendment The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item: Sec. 139J. Certain tipped wages. . (d) Effective date The amendments made by this section shall apply to amounts received after December 31, 2024.