Qualified tip deduction made permanent and expanded

(a) Increased deduction limit for joint return Section 224(b)(1) of the Internal Revenue Code of 1986 is amended by inserting (twice such amount in the case of a joint return) after $25,000. (b) Prevention of waste, fraud, and abuse Section 224(d)(2) of such Code is amended— (1) in subparagraph (B), by striking and at the end, (2) in subparagraph (C), by striking the period at the end and inserting a comma, and (3) by inserting after subparagraph (C) the following new subparagraphs: (D) such amount is paid by a person who does not bear a relationship to such individual described in section 267(b), and (E) such individual does not have an ownership stake in the business which employs them in the job for which such individual is receiving a tip.. (c) TIN requirement Section 224(e) of such Code is amended to read as follows: (e) Taxpayer identification number required No deduction shall be allowed under this section unless the individual includes such individual’s taxpayer identification number (in the case of a joint return, the taxpayer identification number of at least 1 spouse) on the return of tax for the taxable year.. (d) Automatic gratuities treated as qualified tips for certain professions Section 224(d) of such Code is amended by adding at the end the following new paragraph: (4) Treatment of automatic gratuities (A) In general In the case of an individual engaged in an occupation in hospitality, food and beverage service, or cosmetology, the term qualified tips shall include an automatic gratuity. (B) Automatic gratuities For purposes of this paragraph, the term automatic gratuity means, with respect to an individual, any amount which— (i) would be a qualified tip with respect to the individual but for paragraph (2)(A), and (ii) is a mandatory or suggested amount paid pursuant to a uniform policy of the employer, under which such entire amount is received by the individual or, under State or local law, is pooled and received only by employees of the employer under a tip-sharing arrangement.. (e) Deduction made permanent Section 224 of such Code is amended by striking subsection (h). (f) Conforming amendment Section 224 of such Code is amended by striking subsection (f) and by redesignating subsection (g) as subsection (f). (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.