"Big, beautiful" tax bill contains popular break for tips
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The popular no-tax-on-tips provision and another carve-out for overtime pay are both in the "big, beautiful" tax bill unveiled by House Republicans Monday.
Why it matters: Exempting tipped income and overtime from taxes was a big priority for President Trump, who campaigned on the policies.
The big picture: The 389-page bill released Monday afternoon is expected to kick off marathon negotiations over tax breaks and spending cuts within the GOP.
Zoom in: Per the text of the bill, any cash tips received by an individual in an occupation that traditionally and customarily received tips would be eligible for the no-tax provision.
- Such language would presumably prevent higher-paid professionals from somehow classifying regular income as fees — think accountants, lawyers or others who charge fees for service.
- These tax breaks would start in 2025 and expire after 2028, and can be claimed by independent contractors, like Uber drivers, per the WSJ.
Follow the money: The bill does not include a tax exemption for Social Security income. Instead, Americans age 65 and older, who don't itemize, get a $4,000 bonus tacked on to their standard deduction.
- The benefit is for individuals earning less than $75,000 and $150,000 for couples.
Zoom out: The breaks are a key part of the president and Republicans' effort to appeal to more working-class voters.
Yes, but: Overall the draft benefits wealthier Americans, keeping in place all the cuts of the 2017 tax bill, and adding some new goodies, too — like an increase in the tax break for pass-through income.
- The bill would raise the cap on the SALT deduction to $30,000, largely benefiting higher-income homeowners in the wealthy blue state suburbs.
What's next: Lawmakers will debate the bill Tuesday afternoon.
Editor's note: This article has been updated with more details on the bill.
