“No Tax on Tips” Includes Digital Creators, Too

Scope and Mechanics of “No Tax on Tips”

• Deduction applies up to $25k/year in tips (per person), phasing out around $150k AGI ($300k joint), and is federal income-tax only; FICA/payroll taxes still apply.
• Time‑limited: currently 2025–2028, widely seen as a “sunset” provision that can later be weaponized politically.
• IRS must define which occupations are “customarily tipped”; buskers and some performers are explicitly excluded, while digital creators are in.

Loopholes, Gaming, and Enforcement

• Many speculate on reclassifying normal compensation as “tips”: e.g., $20/day wage + $1,800/day “tips,” or parents “tipping” kids in fake jobs.
• Others argue practical limits (the $25k cap and AGI thresholds) keep this from being a huge high‑end loophole, though some wealth transfers could be re-labeled as tips.
• Several point out tips are already heavily underreported; this change largely legalizes existing noncompliance rather than reducing IRS revenue dramatically.

Fairness, Regressivity, and Tax Philosophy

• Strong disagreement over why tip income should be favored over wages for cooks, janitors, stock workers, etc.
• Some call the policy regressive symbolism that complicates the code and distracts from more meaningful reforms (e.g., capital gains, wealth, or payroll taxes).
• Others see it as a modest progressive tweak: many tip earners are low‑ or mid‑income, and higher earners hit phase‑outs.

Gifts vs Income

• One camp argues tips and creator “donations” are economically gifts and should follow gift‑tax rules (taxable to the giver above a high threshold, not to the recipient).
• Others note that U.S. tax practice has always treated tips as compensation because there’s a customer‑service relationship and ongoing expectation of service.

Labor Market and Employer Incentives

• Many see this as a subsidy to employers: more of workers’ pay can be shifted to untaxed customer tips instead of wages, reinforcing low base pay and tipping dependency.
• Concerns that digital platforms and brick‑and‑mortar businesses will expand tip prompts aggressively to exploit the rule.

Tipping Culture and International Comparisons

• Extensive frustration with “tip fatigue,” pre‑service prompts, opaque service charges, and social pressure; some vow to default to 0% where feasible.
• Multiple commenters from non‑tipping countries describe U.S. norms as confusing or coercive, and worry about those norms spreading abroad.
• Counterpoint: some argue tipping aligns incentives and yields more attentive service, though others say service quality is mostly cultural and managerial, not tip‑driven.

Politics and Strategy

• Seen as classic populist, bipartisan pandering: symbolically pro‑worker, practically small and messy.
• Some suggest the real strategic play is pairing a popular, temporary worker break with larger, more permanent corporate or high‑income tax advantages.