Congress quietly gives tipped workers a $35K tax break—but only until 2028
H.R. 6295 — The Working for Tips Tax Relief Act of 2025 · Filed by Donald Davis (D-NC) · Introduced Nov 25, 2025 · Referred to committee
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What it does
This bill allows workers who receive tips to exclude up to $35,000 in reported tips from their taxable income each year, phasing out for earners making $50,000–$75,000 (or $100,000–$150,000 for joint filers) and disappearing entirely above those thresholds. The exclusion applies only to tips received in occupations that customarily received tips as of December 31, 2024, and expires after 2028, with a pilot program to study making it permanent. The Treasury must publish a list of qualifying occupations within 90 days and report to Congress on utilization and wage effects.
Why we flagged it
The bill's core mechanism is a straightforward income exclusion for tips, structured as a temporary tax benefit with income limits and a sunset clause. It is functionally a tax relief measure for a specific occupational class, not a deregulation, subsidy, or commemorative act.
What the text implies
- The $35,000 cap and income phase-out may incentivize underreporting of tips above the threshold or income shifting to stay below the AGI cutoff, creating compliance and audit complexity for the IRS.
- Occupations 'customarily and regularly receiving tips as of December 31, 2024' is a fixed historical snapshot; new service roles or gig-economy tip-based work emerging after 2024 may be excluded, creating inequity among similar workers.
The full analysis lists 5 implications of this text.
Who stands to gain
tipped service workers (waitstaff, bartenders, hairdressers, etc.); low-to-moderate income households