In a new and highly anticipated document that was just released on the Federal Register's website,

the IRS finally provided some much-needed clarification regarding one of President Trump's more unique campaign promises,

the elimination of the tax on tips.

Now, the history of that campaign promise was a wild ride.

If you remember, Trump came out with the no tax on tips platform seemingly out of the blue during one of his speeches.

But it wound up being such a big hit based on polling that within about two weeks, the Kamala Harris campaign also came out with their own promise to also eliminate tax on tips. Now, of course,

eventually Trump won the election, and Congress included the no tax on tips provision within

the text of the big beautiful bill that was then signed into law by President Trump on July

4th of this year. And by the way, just as an aside, in the comments section,

I notice that some people question why I continue to call it the big beautiful bill. That's literally

the name of the bill. It's not just a moniker that Trump gave it. It's actually codified into law

at the very top. It says the one big beautiful bill act of 2025. Anyway, included in the text of that law is a

provision which reads as follows, quote, in the case of qualified tips received by an individual

during any taxable year in the course of a trade or business, such qualified tips shall be taken

into account under subsection A only to the extent that the gross income for the

taxpayer exceeds the sum of the deductions allocable to the trader business in which such qualified

tips are received by the individual for such taxable year. Now, that's obviously a lot of legalese,

and that's why lawyers get paid so much having to dissect that type of text. But in practical terms, what it means is that based on the numbers for the year 2025,

this provision applies to anyone who makes less than $160,000 per year.

The text of the law then continues to clarify, quote,

the term qualified tips means cash tips received by an individual in an occupation which customarily and regularly receive tips on or before December 31, 2024, as provided by the secretary.

Now, the last sentence, as provided by the secretary, refers to the secretary of the treasury, Mr. Scott Besson.

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