Note: Now that the No Tax on Tips measure has been signed into law, the new tax deduction for cash tips takes effect for the 2025 tax year. That means eligible workers could claim the deduction when they file their taxes in early 2026 for income earned in 2025. Despite the excitement over this change, there are some things the OBBBA doesn’t cover.

Millions of U.S. workers who earn tips and overtime pay may be eligible for a federal tax break when they file their 2025 income taxes next year

The “No Tax on Tips” provision, passed and signed into law on July 4 as part of President Donald Trump’s One Big Beautiful Bill Act, allows eligible tipped workers to deduct a portion of their income from tips on their federal income taxes.