The House of Representatives continues work on a reconciliation bill that would enact significant tax provisions and spending cuts. The various legislative committees have completed work on the areas of the bill within their jurisdiction, including the Ways and Means Committee, which proposed language that would enact $3.8 trillion in tax cuts over the next ten years. Over the weekend, the House Budget Committee consolidated the legislation, and the House Bill is now before the Rules Committee, where a managers’ amendment may be considered before it heads to the House floor. This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.
The House Bill includes legislative language that would implement President Trump’s campaign proposal to eliminate the taxation of tipped income, at least temporarily. The language would allow an above-the-line deduction for certain tips received by an individual in an occupation in which tips are ordinarily received. However, several requirements, including those relating to the nature of the tip, the characteristics of the individual receiving the tip, and the relevant industry, must be satisfied. The provision would be effective for tips received on or after January 1, 2025, and would sunset after 2028—leaving its extension to a future Congress during a presidential election year. In addition, the legislation would extend availability of the FICA tip tax credit under Section 45B of the Code, which currently applies to food and beverage establishments, to employers within the beauty service industry.Continue Reading House Reconciliation Bill Would Enact President Trump’s Campaign Promise to Eliminate Tax on Tips