Deduction for cash tips

(a) Deduction allowed (1) In general Part VII of subchapter B of chapter 1 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section: 224. Cash tips (a) In general There shall be allowed as a deduction an amount equal to the cash tips received during the taxable year that are included on statements furnished to the employer pursuant to section 6053(a). (b) Limitation based on modified adjusted gross income (1) In general No deduction shall be allowed by this section for any taxpayer if such taxpayer’s modified adjusted gross income for the taxable year exceeds $450,000 ($900,000, in the case of a joint return). (2) Modified adjusted gross income For purposes of this subsection, the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.. (2) Clerical amendment The table of sections for part VII of subchapter B of chapter 1 is amended by redesignating the item relating to section 224 as relating to section 225 and by inserting after the item relating to section 223 the following new item: Sec. 224. Cash tips.. (b) Deduction allowed to non-itemizers Section 63(b) is amended by striking and at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting, and, and by adding at the end the following new paragraph: (5) the deduction provided in section 224.. (c) Withholding The Secretary of the Treasury (or the Secretary’s delegate) shall modify the tables and procedures prescribed under section 3402(a) of the Internal Revenue Code of 1986 to take into account the deduction allowed under section 224 of such Code (as added by this Act). (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.