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Dissecting the “No Tax on Tips” Provision in the Tax Bill - CU Boulder Today
There has been considerable speculation about the Trump Administration’s “Big, Beautiful Bill” and its potential impact on Social Security. Attracting the most attention, naturally, was the disappearance of the “No Tax on Social Security” pledge, which was covered in a post last week here. Then, there was an initial flurry of interest in the “No Tax on Tips” item, but this was quickly dispelled by explanations that the change refers to federal income tax, not the Federal Insurance Contributions Act (FICA, or the payroll tax, as it’s more commonly known).
So, what does all this mean to workers who receive income from tips? A post on CU Boulder Today by reporter Katy Marquardt Hill provides answers to this question. Ms. Hill reports on an interview with CU Boulder teaching assistant professor of accounting, Nicole Lazzer, covering a series of detailed questions about the tax change. The bottom line reported in the post sums it up nicely, “This policy could offer some real savings for service workers—but the name doesn’t tell the full story. Tips would still be taxed in some ways, and not everyone stands to benefit equally.” Check out Ms. Hill’s post here.