S. 2780 · Where this bill is now
In committee
Introduced in the Senate, Sep 11, 2025
What this bill does
In plain words · AI-written from the official summaryExpands tax deduction for service industry tips
Currently, people in tipped occupations can deduct up to $25,000 per year in tips, but only if those tips are voluntarily given by the customer. This bill would change the rules so that tips automatically added to bills and suggested tips prompted by a business would count as voluntary, making them eligible for that deduction.
How it affects you
If you work in a job that relies on tips—like serving food, bartending, or similar roles—this could help you claim a larger tax deduction. The change mainly affects how certain tips are treated for tax purposes, potentially lowering your taxable income if you receive automatic or suggested tips.
Read the official summary (Introduced in Senate, Sep 11, 2025)
No Tax on Large Party Tips Act
This bill expands the federal tax deduction for qualified tip income to include tips that are automatically added to a customer's bill and tips that are suggested tips prompted by a business by treating such tips as voluntarily paid.
As background, for 2025 through 2028, individuals may claim a tax deduction of up to $25,000 per year for qualified tips received in occupations that customarily and regularly receive tips. However, one of the conditions for claiming the tax credit is that the tips must be voluntary, determined by the customer, and nonnegotiable.
Written by AI (Claude) using only the official summary by the Congressional Research Service, the Library of Congress’s nonpartisan research staff. It can miss nuance, so check the official summary and the bill text for details.
1st SessionS. 2780
A BILL
No Tax on Large Party Tips Act
Sponsor: Sen. Ruben Gallego (D-AZ) · Introduced Sep 11, 2025 · Taxation · 1 version of the text
Sources: Congress.gov actions and votes · bill text from GovInfo · latest official action Sep 11, 2025: “Read twice and referred to the Committee on Finance.”