The financial strain caused by federal taxes on tips and overtime pay has long been a burden for service workers and the employers who support them. In a historic bipartisan move, the “One Big Beautiful Bill” has been signed into law, delivering on promises to eliminate federal income tax on tips and overtime.

Zaller Law Group and TipHaus are proud to have supported this effort, advocating for legislation that directly improves the lives of millions of American workers and strengthens the hospitality industry. Here’s what you need to know:

1. A Landmark Win for Workers — and Bipartisan Cooperation

The “No Tax on Tips and Overtime” policy had rare bipartisan momentum:

• Donald Trump, who made it a campaign pledge.
• Kamala Harris, who voiced strong support during her own run.
• President Biden, whose administration confirmed he would sign the legislation if passed.

On Friday, July 5, 2025, the bill was officially signed into law. This is a transformative moment for the hospitality sector, acknowledging the critical role that tipped and overtime-reliant workers play in the U.S. economy.

2. What’s in the Law: How the Deductions Work

No Tax on Tips

• Workers can now deduct up to $25,000 in tip income above the line on their federal return.
• Applies to tips that are voluntarily paid — not mandatory service charges.
• Available from tax years 2025 through 2028.
• Phases out for individuals earning more than $150,000 (or $300,000 for couples).

No Tax on Overtime

• Deduction of up to...

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