Donald Trump signed Bill to make tips tax-free!

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act, marking a major rewrite of the federal tax system.

Backers of the law describe it as meaningful tax relief for working Americans, while critics caution that it could increase the federal deficit by an estimated $3.4 trillion over the next decade.

The legislation makes earlier tax cuts permanent and introduces new measures, including tax-free overtime pay, larger deductions for seniors, and exemptions for tips from federal income tax.

Although tipped income must still be reported, the exemption is expected to benefit millions of workers in service and hospitality industries.

Senator Ted Cruz defended the changes, saying workers should be able to keep more of their earnings, a message widely supported by proponents of the bill.

Supporters argue the law raises take-home pay without forcing employers to increase wages, giving workers immediate financial relief.

Critics, however, warn that the policy may favor select groups, encourage employers to restructure pay around tips, and sacrifice long-term fiscal stability for short-term economic gains, even as many hospitality workers report larger paychecks.