Trump vows to do away with tax on tips.

The data further shows tax relief was concentrated among American families and workers earning under $200,000.

96% of filers receiving a tax cut earned less than $200,000. 

• Filers earning between $100,000 to $200,000, who claimed one of President Trump’s signature tax cuts, received an average tax cut of over $1,250.

Nearly 70% of filers receiving a tax cut earned less than $100,000.

• Filers earning between $50,000 to $100,000, who claimed one of President Trump’s signature tax cuts, received an average tax cut over $815.

DELIVERING FOR AMERICAN FAMILIES AND WORKERS

Through the April tax filing deadline, American families and workers claimed over $82 billion in individual relief directly from the Working Families Tax Cuts. That relief will grow as taxpayers who have filed for extensions continue to file their returns.

President Trump’s signature tax cuts deliver substantial relief to hardworking Americans and provide greater relief and tax certainty to low- and middle-income households.

No Tax on Tips: Over 7.5 million filers have claimed No Tax on Tips, with an average deduction of over $7,000. 

• 90% of filers claiming the No Tax on Tips deduction had income under $100,000. 
• 99% of filers claiming the No Tax on Tips deduction had income under $200,000.

No Tax on Overtime: Over 29 million filers have claimed No Tax on Overtime, with an average deduction of over $3,100. 

• 75% of filers claiming the No Tax on Overtime deduction had income under $100,000. 
• 96% of filers claiming the No Tax on Overtime deduction had income under $200,000.
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Enhanced Senior Deduction: Over 35 million seniors have claimed the Enhanced Deduction for Seniors, with an average deduction of over $7,500. 

• 68% of filers claiming the Enhanced Senior Deduction had income under $100,000. 
• 94% of filers claiming the Enhanced Senior Deduction had income under $200,000.

No Tax on Car Loan Interest: Over 1.4 million filers have claimed No Tax on Car Loan Interest on their new American vehicles, with an average deduction of over $1,800. 

• 62% of filers claiming the No Tax on Car Loan Interest deduction had income under $100,000. 
• 98% of filers claiming the No Tax on Car Loan Interest deduction had income under $200,000.

Trump Accounts: Over 5.5 million Trump Accounts have been opened, with 1.4 million eligible for the $1,000 pilot program contribution. 

• 86% of all Trump Accounts opened are linked to families earning less than $200,000, giving working families more opportunity to invest in the future of their young, loved ones.

Enhanced Child Tax Credit: Nearly 40 million families have claimed the enhanced Child Tax Credit, which is permanently doubled and expanded by the Working Families Tax Cuts. 

• 65% of all families claiming the credit had income under $100,000.
• 89% of all families claiming the credit had income under $200,000.

Doubled Standard Deduction: Over 127 million filers (90% of all tax filers) have claimed the permanently doubled standard deduction, simplifying tax filing for millions across America.

So, anyone that claims this was only benefiting the rich is completely misleading folks, either intentionally or because they are misinformed themselves.

Then the Department of treasury then announced that the month of June had a surplus of $27 Billion dollars.  The number was the exact value of the receipts from tariffs — custom duties.  That brings that total to $108 Billion total for the year with these duties.  Realize also that some of these tariffs have only been in place in some of these countries for a short time.

These are things that are really good for the economy.

Your numbers come from a source forwarding the agenda and not sure how you could calculate a no tips average savings of 7k, that would equate AVERAGE tip earnings of nearly 80k and how many servers in this country make an average of 80k on tips?

Tell me something as well, these are not perm tax savings but how much did the average household pay in added tariff costs and gas costs from Trumps decision to back Israel and which is still ongoing now? What figure can you place on the discretionary TRUMP tax which came from his direct and sole choices that impacted Americans?

I heard a figure of 10k per average family from the combo of tariff costs and gas but we are not finished yet as the COGS will push forward with higher petro prices on items we buy for several years and might be permanent even when/if prices stay down.

You make the double standard deduction out to be some glorious thing, I did not experience the glory since he made those changes the first trip...my tax burden has never been higher since the tax code change, that marginal middle of the taxpayer group got creamed with the elimination of many tax deductions which brought many from one tier to another, me being one of those.

I also loved his scammy IRA change this year where if you make more than 150k you cannot do the catch up 401k contributions you are forced into a Roth401k which has a tax impact of 1700 plus depending on bracket.

@wallstreetcappers

 US Department of the Treasury and the IRS provided the data

@Raiders22

 I had to find a neutral source so you wouldnt throw down the usual partisan deflection blame. This is from Fidelity Investments which is neutral and explains the benefit. It is not 7k in savings. The average tipped worker is taxed at the lowest bracket with the exception being in the second bracket but that is a slim minority and some do not even make it past the standard deduction to claim the benefit as they are not taxed up to that point anyway. 

https://www.fidelity.com/learning-center/personal-finance/no-tax-on-tips

Perfectly written, except for 1 huge problem. No matter who writes and talks about these kinds of things, magas and republicans will never believe this to be true, unless trump or somebody in his admin says that the article is indeed correct.

So your battling a losing battle. Maybe if hannity, ingram or jesse waters says its true, maybe they will believe.

I doubt trump and his admin would ever put out false info about things

Am still waiting for my electric bill to be cut in half, that he promised would happen by jan 1, 2026. He told us he would make the electric companies lower their prices. All those states down south that get their electricity thru coal produced electric, must be loving their very high prices this summer. 

@wallstreetcappers

 It is not 7k in savings.

Correct.

That is a link explaining how the new 'deduction' works.

I think you were mistaking 'deductions' and 'savings' to be synonymous; they are not.

In tax terminology, "deduction" and "tax savings" are related but not the same thing.

In other words:

Tax deduction = the amount that is subtracted from your taxable income.

Tax savings = the actual reduction in the amount of tax you owe because of that deduction.

For example:

Suppose you earn $50,000 and qualify for a $10,000 deduction.

Taxable income goes from $50,000 to $40,000.

If your marginal federal tax rate is 12%, your tax savings are:

$10,000 × 12% = $1,200

You did not save $10,000 in taxes.

So, this is a distinction that matters.

For example, if a law allows up to $25,000 of tip income to be deducted, that does not mean every eligible worker saves $25,000 in taxes. It means they can reduce their taxable income by up to $25,000. Their actual tax savings depend on:

1) Their taxable income.

2) Their marginal tax bracket.

3) Whether they have enough taxable income to benefit from the full deduction.

4) Any other limitations in the law.

So if someone says, "Workers get a $25,000 deduction," and another person says, "Workers save $25,000," those are not equivalent statements. The latter is generally incorrect.

A deduction is not the same as a dollar-for-dollar tax savings—is an important distinction.

@cd329

 Perfectly written

I doubt trump and his admin would ever put out false info about things

"...but there is no general practice or evidence that administrations direct the IRS to alter the underlying statistics on taxes paid to fit political objectives."

Hopefully, this helps.

I look forward to Wallstreets response on that post

It is a common point of confusion. 

That is why the data report was specific.

No Tax on Tips: Over 7.5 million filers have claimed No Tax on Tips, with an average deduction of over $7,000. 

• 90% of filers claiming the No Tax on Tips deduction had income under $100,000. 
• 99% of filers claiming the No Tax on Tips deduction had income under $200,000.

That was your post, so you are trying to tell me that a 7k deduction is not a savings when the group you just defined does not pass the first income tax bracket OR they would not be allowed to deduct it. I agree that 90% plus are under 100k thats an obvious fact, servers do not make 100k in tips outside a VERY small outlier. To make 100k in tips would mean you are serving over 1 MILLION in food and bev which is quite impossible especially when this is after the usual tip outs and also many states have a higher min wage for servers AND that is claimed tips which also is not accurate since servers estimate their tips on the low side for obvious reasons.

The issue is how can you equate a 7k deduction off a max 25k allowance? That equates to the AVERAGE being in that 25-30% tax bracket, the AVERAGE. Now what brackets are 25% plus to meet this bar? Single you can earn just a blip over 100k and be at 22% and that is AFTER standard deductions which reduces taxable income. Married you can earn double to over 200k and 100k married is at a 12% bracket AFTER standard deduction and any reducing items like IRA or medical etc.

So how can someone get a 7k deduction off a 25k max on AVERAGE? To somehow meet the bar and still be 90% under 100k is impossible, the 100k threshold is a taxable bracket of either 22% or 12%.

As the Fidelity website mentions, the average deduction benefit is 1700 or whatever the round number as stated there and THAT makes sense. If you are suggesting that the deduction is the 7k figure being the level of TIPS not being taxed, that has nothing to do with 25k max, that means the average server only reduced their INCOME by 7k not that it is a deduction.

Its like saying I had 20k of medical bills last year  so my deduction is 20k, well that is not true as there are thresholds to meet before gaining a deduction, same goes with this. A max 25k allowance to NOT pay taxes means the MAX deduction is the tax impact, that is the entire premise of this scheme. The server does not have to claim UP to 25k in tips wages, that potentially reduces their tax bill or provides a tax refund of X dollars, THAT is the measure not that 7k is the average tips sum not claimed as income because who cares the average is 7k income reduction, what is the TAX benefit? 

If I make a 25k 401k contribution in 2025 that does not mean I have a 25k tax deduction, it means my taxable INCOME is reduced 25k and depending on my tax bracket the tax deduction is according to that bracket.

@wallstreetcappers

 No Tax on Tips: Over 7.5 million filers have claimed No Tax on Tips, with an average deduction of over $7,000. 

• 90% of filers claiming the No Tax on Tips deduction had income under $100,000. 
• 99% of filers claiming the No Tax on Tips deduction had income under $200,000.

That was your post, so you are trying to tell me that a 7k deduction is not a savings

Correct.  

It is the deduction amount.

The actual savings amount is dependent on the individual's tax situation.

@Raiders22

What you posted makes no sense, is the average server taking the income reduction only claiming 7k, is that your contention? How is this seen as some positive event when the max is 25k and the NET benefit of this 7k is about 1k only?

The OT scheme is even worse, 3k in taxable income reduction given the phase outs nets like a max of 500 bucks, is this a bragging point for your side that the net benefit of these taxable income reductions is like 1k or 500 bucks?

Id take the no war on Iran and no stupid tariffs and save REAL money versus this peanuts you are bragging about here.

7k average of a 25k max is pretty lame.

@wallstreetcappers

 I think you are mixing up deductions and tax savings, and that seems to be the source of the confusion.

"Is the average server taking the income reduction only claiming 7k?"

The post says the average deduction claimed is over $7,000. That means the average filer who claimed the deduction reduced their taxable income by about $7,000. It does not mean every eligible worker claimed the $25,000 maximum.

"How is this seen as some positive event when the max is 25k..."

The fact that the maximum allowed is $25,000 doesn't mean the average person has $25,000 in qualifying tip income. Many tipped workers simply won't have that much eligible tip income, so it's expected that the average deduction would be much lower than the maximum.

"...and the NET benefit of this 7k is about 1k only?"

A $7,000 deduction does not produce a $7,000 tax savings.

If someone is in:

1) the 10% bracket, the savings are about $700

2) the 12% bracket, about $840

3) the 22% bracket, about $1,540

So for many tipped workers, a $7,000 deduction would indeed translate into roughly $700–$1,000 in federal income tax savings, depending on their tax situation.

The post says the average deduction is over $7,000, not that the average worker saved $7,000 in taxes. A deduction reduces taxable income, not your tax bill dollar for dollar. So yes, for many workers a $7,000 deduction would translate into roughly $700–$1,000 in federal income tax savings, depending on their marginal tax bracket. The $25,000 figure is simply the maximum allowable deduction, not the amount most workers are expected to claim.

When you understand the differentiation between what is meant by 'deduction' and what is meant by 'savings' it makes perfect sense.

So, the 'net positive' is seen in each individual's savings on their tax bill.  Even though everyone did not qualify for the maximum amount allowed by the new tax law the average person claiming this deduction was qualifying for around $7000 of it.  Which, that amount of tax savings, is a huge net benefit for someone compared to their previous year's tax bill.

@Raiders22

 Im saying its pathetic, this drop in the bucket is an insult when the same group allegedly aided got wacked by gas prices and tariff cost increases. Even the goofy new FED chair blamed inflation on Trump due to this war he started and tariffs, that is Trumps guy saying the obvious.

So you think the average server claiming 30% of a scheme max and netting a cool 700 bucks is cause for celebration? The OT scheme is worse but what is the purpose of some scheme that results in like zero benefit? I think his TARIFF checks would have fake netted more than this farce.

@wallstreetcappers

  Im saying its pathetic, this drop in the bucket is an insult

I think the average tax refund increased by 7.5% this year.

I would not call that pathetic for those folks.  

It is far better than the previous tax burden they had.  

They had a savings on gas (as we have talked about before) until the situation in Iran and that was not as high as they had paid previously -- and they have been coming down again.  The inflation had come down from a decades-high.  Revenue surplus largely due to tariffs last month was a good thing.

So, all these things adding up has helped the folks that needed it the most.

It was an attempt at deception to claim these tax cuts would only benefit the rich.  

Now that the numbers are in, this proves it was just more scare tactics.

No one should be dismissing or belittling when something is finally done to help the folks that need the help the most.

I would not call 7.5% a 'drop in the bucket' for someone that is likely paycheck to paycheck.

@Raiders22

 I call it a drop in the bucket when at the same time inflation due to Trump caused more damage than this paltry tax scheme. It was a vote grab and a pretty lousy one at that. 

It would have been better for Trump to not get suckered into this war and be a tariff baffoon and buy Bitcoin instead, think of the value Trump could have generated with yet another one of his fake campaign promises instead of some penny scam 300 to 500 buck windfall like this.

When you throw around 7k and tax deduction sorry but I actually took the number as a direct tax benefit not an income reduction, 7k average out of 25k potential is pretty crummy. 

Trump spends more on golf and pool screw ups and MMA lawn repair than this low grade tax scheme benefit.

@wallstreetcappers

  I call it a drop in the bucket when at the same time inflation due to Trump caused more damage than this paltry tax scheme. It was a vote grab and a pretty lousy one at that. 

This is stated as fact, but it isn't established.

I think that is completely the wrong way to look at it.  Obviously, the inflation has come way down from where it was with Biden.  

Again, it is not a paltry scheme to the folks that very much can use the extra money.

Of course, Republicans always run on cutting taxes and Democrats run on raising the taxes.  Nothing surprising about that.  That is also what trump did the first time he ran and won.

Politicians often support policies they believe are both politically popular and substantively beneficial. Calling it a "vote grab" isn't something that can be proven simply from the existence of the policy.

It would have been better for Trump to not get suckered into this war and be a tariff baffoon and buy Bitcoin instead, think of the value Trump could have generated with yet another one of his fake campaign promises instead of some penny scam 300 to 500 buck windfall like this.

This is another topic altogether.  This assumes all things like this are binary choices; thankfully, they are not.

This is speculation.  It's a hypothetical, not a factual rebuttal.

This is also an assertion.

Whether a campaign promise is "fake" depends on whether the politician never intended to pursue it, which is difficult to establish.

Some taxpayers may see little or no benefit because they owe no federal income tax after deductions, while others could save substantially more. So "$300 to $500" isn't a generally accurate estimate without specifying the assumptions.

When you throw around 7k and tax deduction sorry but I actually took the number as a direct tax benefit not an income reduction, 7k average out of 25k potential is pretty crummy. 

This is actually an admission that the original post was misread. "average deduction of over $7,000".  A deduction is not a dollar-for-dollar tax reduction. So this part isn't really a criticism of the post—it's acknowledging an initial misunderstanding.

Yes, no problem.  A lot of folks get confused by all of the tax terms, etc.

That is your opinion about it being pretty crummy.  No, 7K is not crummy at all.  Look at how much it reduced the average tax burden for those folks. Think about how much you have to be tipped and make in salary to qualify for 25K.  What if they had said 100K?  Then 25K out of 100K would be the crummy number then.

This comparison isn't necessarily meaningful.

The $25,000 figure is a maximum, not an expected average. Many eligible workers won't have $25,000 in qualifying tip income, so an average deduction well below the cap isn't surprising by itself.

Trump spends more on golf and pool screw ups and MMA lawn repair than this low grade tax scheme benefit.

So, what?  Why does it matter if he golfs now?  The tax thing was done already and was shown to have benefited the average folks very much.

Unless backed by reliable figures, this is unsupported.

Even if spending estimates were accurate, comparing presidential travel or event costs to the aggregate tax benefit is not necessarily an apples-to-apples comparison.

So, it was not low-grade at all for them.  It was far better than what the Democrats were proposing.

Again, this is a good amount of money to folks that are the paycheck to paycheck folks.  You can also, very easily, say they were still suffering from the Biden high gas prices and high inflation.  So, this cam at a much needed time for those folks.

I do not understand how someone can dismiss that.

But these are the things the folks voted for and what got Trump elected.  So, this is a campaign promise that he completed and it seemingly worked out very well for the folks that needed it and could use it the most.

Are there are other things he could do better, of course.  But that is not the topic at hand.

@Raiders22

 The term is used in several ways and to me I consider the term "Tax deduction" not to mean how you used the term. I have an accounting degree and a background in this area and I do not use the term as you did and as many do. I think it is erroneous and inaccurate but many do it and you did it there.

A tax deduction means tax is deducted, I do not use the term to mean a reduction in taxable income rather the result of the reduction in taxable income. I never understood why people use a term in that way so when you stated that 7k I would have absolutely no reason to consider you meant it as you did...to me I would rather say nothing than to claim that the average income reduction was 30% of the maximum potential reduction, that to me is just atrocious and laughable.

The BTC comment was based on how Trump has harmed this country with his decisions on tariffs and this awful Iran mess, that has financially harmed the US so this paltry scheme seems phony especially with other choices that harmed the same group. Imploding healthcare has harmed this group much more than some 300-400 buck windfall, the net impact on the "server-class" from Trump has been horrible.

@wallstreetcappers

 The term is used in several ways and to me I consider the term "Tax deduction" not to mean how you used the term.

No problem.  It is not me using it that way.  That is simply the way it is used in the tax law field.

I understand these terms can be confusing.

Hopefully that cleared it up a bit.

@Raiders22

You used a term that has multiple purposes, no you did not clear anything up for me or teach me something. The fact people use a term in that way while common is just off to me but thats fine. I think where your cut/paste stuff threw me was the extremely underwhelming result of the comment. To state a result that is so badly off the potential benefit is hilarious and pathetic but maybe I should have known that the King of Bluster would net that kind of result and then try to fluff it in some way to make a positive spin. A 30% impact a paltry in pocket cash impact is something probably better not said. So your lackluster stat lost me let alone the use of a term in a common but inaccurate way.

@wallstreetcappers

 You used a term that has multiple purposes, no you did not clear anything up for me or teach me something. The fact people use a term in that way while common is just off to me but thats fine. 

The issue is that folks generally conflate the two terms.  

As I explained, the deduction is not the savings.  The amount of savings is wholly dependent on each individual's tax situation. 

For example, some folks will have other deductions as well, will be in various tax brackets, etc.

It is pretty straight forward once you understand the part.

"People" that use the "term in that way" are not tax or financial folks.  You will never see the folks in this industry confuse the two terms or even use them interchangeably.  Even most standard news articles understand the difference and present the information in the correct manner.  

But the difference between 'deduction' and 'savings' is pretty clear once you think about what they mean.

To state a result that is so badly off the potential benefit is hilarious and pathetic

The result is no 'badly off' the 'potential benefit'.  The benefit is based on a minimum and maximum allowed deduction.  So, in effect, if used correctly, everyone gets there 'maximum' savings allowed by law on that one deduction.

A 30% impact a paltry in pocket cash impact is something probably better not said.

No idea why you think that is paltry.

When so many of the folks that can use this deduction are paycheck to paycheck it is not paltry to them.

Anytime these folks can save money on taxes it is not paltry.  

It is odd that you would rather not give them a tax break -- paltry, or not.

@wallstreetcappers

 To be quite frank, you would be one of the people I would expect to know the difference between a tax deduction and a tax savings.  

I understand the average person on here may not.

Are you sure you are not mixing up tax 'deductions' and tax 'credits'?

I could understand that.  A lot of people mix those up as well.

A tax 'credit' reduces the amount of tax you owe -- so that is a direct savings of that amount.

A tax 'deduction' works a bit differently -- they reduce your taxable income, so the savings is dependent on other variables, like tax bracket and other deductions, etc.