Comment by itake
2 days ago
https://archive.is/20250731232051/https://www.newyorker.com/...
> Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.
neat, but you can only deduct up to $25k and the benefits phase out if you earn more than $150k (single filers).
I think most bartenders would appreciate an extra $25k.
I am sure they would! but that isn't what the law says. Its a $25k DEDUCTION.
If someone earned $125k salary + $25k in tips. Their taxable income would decrease by about $6k (or $500/mo, 4% overall).
Okay. I think they would also like an extra $6k.
Deducting 25k does not mean taking home an extra 25k. It means, probably, somewhere around $1-3k, depending on their tax bracket.
That's...not how it works, like, at all. It's a tax credit, not actual money that you pocket additionally from your existing paycheck. It also only lasts until 2028.