Employers would pay tipped workers the full federal minimum wage

Employers would pay tipped workers the full federal minimum wage before tips. The requirement would cover tipped employees under the federal wage law. Workers would keep their tips, except for pools shared among workers who customarily and regularly receive tips.

Eligible workers could subtract qualifying tips from income when calculating federal income tax. Workers must hold traditionally tipped jobs and have adjusted gross income—income after certain tax adjustments—of $112,500 or less for that tax year. Tips must be reported to the employer and come from an unrelated person. The worker must have no ownership stake in the business employing them for the tipped job. Workers could claim the deduction whether or not they list individual tax deductions. The tax provisions would apply to tax years beginning after December 31, 2025.