Make Me Smart The realities of No Tax on Tips and Overtime laws
Jul 24, 2025
Kristin Schwab, a reporter for Marketplace specializing in economic issues, joins the discussion on the new GOP tax law's implications for American workers. She explains how the "No Tax on Tips" initiative might not have the sweeping effects many expect. The conversation dives into the complexities of these tax breaks and their potential impact on millions of workers and businesses. They also touch on the broader implications for government revenue and the evolving culture around tipping in the service industry.
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Unclear Eligibility for No-Tax Tips
- The "No Taxes on Tips" benefit applies only to certain commonly tipped jobs as defined by upcoming regulations. - Precise eligibility and rules are still pending Treasury Department regulations expected soon.
Tax Deduction, Not Exemption
- "No tax on tips" means a deduction lowering taxable income, not complete tax exemption. - Workers still pay Social Security, Medicare, and likely state and local taxes.
Overtime Tax Break Limits
- Overtime tax break only covers the extra half of time-and-a-half pay, not the full amount. - Workers expecting big benefit often find refund about one-third of that expectation.