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Post Context
All four numbers here track the actual statute. The One Big Beautiful Bill Act, H.R. 1, created:
- Tips deduction — up to $25,000, phasing out above $150,000 MAGI (single) / $300,000 (joint)
- Overtime deduction — up to $12,500 (single) / $25,000 (joint), same phaseout thresholds
- Senior deduction — extra $6,000 for filers 65+, phasing out above $75,000 (single) / $150,000 (joint)
All three are retroactive to 2025 and run through 2028. The IRS's own guidance confirms the tips and overtime figures.
The vote: The House passed the Senate-amended bill 218-214 on July 3, 2025. Every Democrat present voted no, and two Republicans — Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania — crossed over to vote no as well. Trump signed it July 4.
Worth knowing: this isn't the first time "no tax on tips" came up in Congress. Ted Cruz introduced a standalone version in January 2025 with Nevada Democrats Jacky Rosen and Catherine Cortez Masto as co-sponsors from the start. That bill passed the Senate 100-0 by unanimous consent on May 20 — every senator present voted for it. It never got a House vote as a standalone bill; instead, House Republicans built their own tips deduction into the OBBBA package six weeks later. Cortez Masto's office has criticized that version for sunsetting after four years rather than being permanent, and for arriving bundled with Medicaid cuts.
What's missing from the post: CBO projects OBBBA adds $3.4 trillion to the deficit over ten years, paid for partly by roughly $625 billion in Medicaid cuts, with CBO estimating 7.8 million people losing coverage through new work requirements. These deductions also don't touch payroll tax — tips and overtime are still taxed for Social Security and Medicare.
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