Here's a Tip

For years, Elena worked double shifts as a waitress at a busy diner at the corner of Bates and Randolph in Detroit. The long hours and constant smile were worth it, she’d say, but come tax season, watching a chunk of her hard-earned tips disappear always stung a little.

That’s why she perked up when her manager mentioned a new change: the “No Tax on Tips” law. Starting in 2026, workers like Elena, in jobs where tips are a regular part of the paycheck, may be able to keep more of what they earn.

The new law lets eligible workers exclude up to $25,000.00 of tip income from federal income taxes. It covers a wide range of service jobs, not just restaurant staff, but also barbers, hairstylists, nail techs, hotel clerks, ride-share drivers, and others who live off customer generosity.

There are a few catches: the tips must be voluntary, reported properly, and earned from eligible service work. But for millions of Americans, it’s a welcome change that recognizes the effort behind every poured cup of coffee, styled haircut, and late-night delivery.

For Elena, it means the next time a regular leaves a generous tip, she’ll be able to smile knowing a little more of it stays where it belongs – in her pocket.