“Tips are tax-free now.”

What the law says

The Code allows a deduction for qualified tips. Tips are still income; the deduction reduces how much of them is taxed.
There is a yearly cap, and it shrinks as your modified adjusted gross income rises above a threshold set in the statute, which is higher on a joint return.

Source: IRC §224. Read the full rule, with the law quoted

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More claims about the same rule

“With no tax on tips, you don't have to report your tips anymore.” · Not VALID
“Every tip counts for the tips deduction, in any job.” · Not VALID
“The tips deduction is permanent.” · Not VALID

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