Mon Jul 14 08:50:00 UTC 2025: **Here’s a summary of the text:**
A new tax law, seemingly fulfilling promises made by former President Trump, introduces deductions for tipped workers and those earning overtime pay from 2025-2028. Tipped workers can deduct up to $25,000 in tips, while those earning overtime can deduct up to $12,500 ($25,000 for married couples), subject to income limitations and Social Security number requirements. While this could benefit many workers, it also raises concerns about fairness as it could create disparities between workers in different roles and potentially incentivize shifts in pay structures. The IRS and Treasury Department are tasked with defining the specifics and eligibility requirements for these deductions.
**Here’s a news article based on the text:**
**New Tax Law Offers Breaks for Tipped Workers and Overtime Pay, Sparks Fairness Debate**
**New York, NY** – A new tax law, slated to take effect from 2025 to 2028, promises tax relief for tipped workers and those earning overtime pay, potentially fulfilling campaign promises made by former President Donald Trump. However, the law is also sparking debate about fairness and potential unintended consequences.
Under the new provisions, tipped workers can deduct up to $25,000 in tips from their federal taxable income, while those earning overtime pay can deduct up to $12,500 (or $25,000 for married couples filing jointly). These deductions phase out for individuals earning over $150,000 and couples earning over $300,000. Both provisions also require the taxpayer, and their spouse if applicable, to have a Social Security number.
While proponents hail the law as a win for workers struggling with rising costs, tax experts are raising concerns. “The provisions arbitrarily reward some workers over others facing the same financial circumstances,” says Abir Mandal, senior policy analyst at the Tax Foundation. Critics point out that the law could create disparities between employees in different sectors, with those unable to access tipped or overtime-heavy roles being disadvantaged.
Moreover, some fear the law could incentivize businesses and workers to manipulate pay structures to maximize tips or overtime, potentially fueling the already prevalent practice of tipping and shifting compensation burdens away from employers. “It is a win for the business owner,” Karla Dennis, a tax strategist, previously told Fortune about the policy. “They may have more of their employees wanting to work the jobs that earn tips, and it may also help to get more people in these service-oriented jobs.”
The Treasury Department and IRS are now tasked with defining which specific service roles and types of overtime qualify for the deductions. Jennifer Karpchuk, cochair of Holland & Knight’s state and local tax team, notes that the overtime deduction only applies to overtime pay as defined by the Fair Labor Standards Act (FLSA) of 1938.
The law’s impact will depend on the specific regulations implemented and how businesses and workers adapt to the new incentives. More information will be available in the months ahead as the IRS and Treasury Department work to clarify the details.
First Piper 