New law exempts up to $25,000 in tips from federal taxes, delivering on Trump’s campaign pledge Unclear rules leave workers and employers guessing whi

Note: Now that the No Tax on Tips measure has been signed into law, the new tax deduction for cash tips takes effect for the 2025 tax year. That means eligible workers could claim the deduction when they file their taxes in early 2026 for income earned in 2025. Despite the excitement over this change, there are some things the OBBBA doesn’t cover.

The changes won’t happen all at once. Here’s when Americans can expect key provisions of the GOP tax and spending bill to go into effect.