Congress passed a bill including a temporary tax exemption for tips, allowing a $25,000 annual deduction from taxable income for most tipped workers. Those earning over $150,000 will still see tipped income taxed. The provision, part of a larger spending and tax package, is slated to expire in 2028. While hailed by some as a campaign promise kept, critics argue the bill's overall impact is regressive, citing cuts to social programs that disproportionately affect lower-income individuals. The IRS will provide further guidance on implementing the new law.

Prepared by Christopher Adams and reviewed by editorial team.