What was promised
At a rally in Las Vegas's Sunset Park on 9 June 2024, Donald Trump tested out this line:
"When I get to office, we are going to not charge taxes on tips. We're not going to do it, and we're going to do that right away, first thing in office, because it's been a point of contention for years and years and years."
Clearly this was directed at Nevada who has lots of tipped workers. Not everyone liked it though. The Culinary Workers Union came back and said the people of Nevada know "the difference between real solutions and wild campaign promises". Since taxes are made by Congress the president alone couldn't do this either.
But it stuck with people. About 2 months later Kamala Harris in Las Vegas as well stated she would "eliminate taxes on tips for service and hospitality workers". Trump then said she "just copied my NO TAXES ON TIPS Policy".
Something to note here is he never said what taxes he would eliminate. Which as you will see below makes a big difference.
What's happened since
May 2025. The Senate approved the No Tax on Tips Act. It was a Ted Cruz bill that Nevada Democratic Senator Jacky Rosen also supported. When it was voted on no one voted against it.
July 2025. What ended up being law was included in the One Big Beautiful Bill Act which Trump signed on 4 July 2025. So it wasn't the first thing he did when he got into office. But it does affect the full 2025 tax year. The IRS says you will receive a deduction up to $25,000 on your qualified tips each year. This is per return so if you're married it would be split. The law will be in effect until 2028. After you make over $150,000 (or $300k if you're married) it will start phasing out. You can use this even if you don't itemize your deductions. Just have to have a Social Security Number that you are allowed to work with.
What it does not do is take away Social Security taxes or Medicare taxes that come out of your tips. As the Congressional Research Service states this only reduces your income tax. So no you are not free of "taxes on tips". In Dec 2025 the Joint Committee on Taxation estimated the deduction will cost $28.6 billion over the next 5 years (2025-2029).
Another thing to keep in mind. The CRS using data from Yale's Budget Lab showed that 37% of tipped workers did not make enough to pay taxes in 2022. So the deduction will not help them at all.
April 2026. Final rules were released from the Treasury/IRS listing over 70 job types that qualify. Any automatic service charge will not count. A tip must be given to you.
Filing season 2026. The Treasury announced as of mid April over 6 million people used the deduction averaging over $7,100 each. They said once the due date for filing came and went they were at over 7.5 million. Of course using the deduction doesn't mean you saved that much. FactCheck.org calculated that using $7,000 at a tax rate of 12% you save $840. They also criticized Trump when he told a crowd in Las Vegas in Aug 2026 that tipped workers in Nevada "saved an average of $10,000 on their taxes". Which again confused the deduction and savings. And they believe his number of 440,000 tipped workers in Nevada was too high.
Current status
Partially delivered. People did pay less income tax on their tips for 2025. There are a lot of caveats to this. You can only deduct up to a certain amount, it phases out after you reach a certain income. Social security and medicare taxes still come out of your tips. The deduction ends after 2028 unless Congress votes to extend it. And as mentioned earlier at least a third of tipped workers do not make enough to pay taxes so they gain nothing.