What This Bill Does · Plain English
Summary · Congress.gov
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.
Action Timeline
2025-09-11
Introduced in Senate
2025-09-11
Read twice and referred to the Committee on Finance.
Frequently Asked Questions
Did S.2780 pass?
S.2780 is still alive. Current stage: COMMITTEE. Pass likelihood: pending.
What does S.2780 do?
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 nonnego…
Who sponsored S.2780?
S.2780 was sponsored by Ruben Gallego (D-Arizona).
Full Bill Text
119 S2780 IS: No Tax on Large Party Tips Act U.S. Senate 2025-09-11 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain. II 119th CONGRESS 1st Session S. 2780 IN THE SENATE OF THE UNITED STATES September 11, 2025 Mr. Gallego introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To clarify the treatment of certain tips for purposes of the tax deduction for qualified tips. 1. Short title This Act may be cited as the No Tax on Large Party Tips Act . 2. Treatment of certain tips (a) In general For purposes of section 224(d)(2)(A) of the Internal Revenue Code of 1986— (1) any tip automatically added to a customer’s bill at the time of payment, and (2) any tip that is a suggested tip prompted by a business, shall be treated as paid voluntarily.
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