So far in Donald Trump’s second administration, Congress has capitulated to the President on every issue, effectively becoming a defunct body within our system of government.

One thing Congress has accomplished is Trump’s top legislative priority, known as the “Big, Beautiful Bill.”

While its drafting, contents and signing have been controversial, this bill, known as H.R. 1 in the House and SB-129 in the Senate, has received plenty of attention from both sides, who use it to bolster their talking points, knowing full well that almost no one has actually read the bill.

While Democrats have criticized the bill’s provisions, including making Trump’s first-term tax cuts permanent, many on the left concede that the “no taxes on tips” provision benefits the working class and offer vocal and written support for it through politicians and mainstream media outlets. The problem is that these supporters may not have read or understood that portion of the bill.

In the extensive document that is H.R. 1, the section regarding the removal of taxation on tips can be found about a third of the way through, in the first section under “Chapter 2,” labeled “DELIVERING ON PRESIDENTIAL PRIORITIES TO PROVIDE NEW MIDDLE-CLASS TAX RELIEF.” There, we find Sec. 70201, titled “NO TAXES ON TIPS.” This section, just over 400 words long, uses legal language typical of congressional bills, which, while necessary for clarity, can be difficult for those without policy experience or a law degree to comprehend fully.

The core of the bill can be summarized in three points:

—“There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the individual …”

—“The amount allowed as a deduction under this section for any taxable year shall not exceed $25,000.”

—“The term ‘qualified tips’ means cash tips received by an individual in an occupation which customarily and regularly receives tips …”

So, what do these three elements of the bill indicate? First, they reveal the key aspect of the “no taxes on tips” policy: there are still taxes on tips.

Yes, that’s correct. The bill allows a deduction for taxes paid on tipped income, not a removal of the tax collection process for individual earners from their weekly or biweekly paychecks. Instead, taxpayers must calculate the taxes charged throughout the year on just the tip portion of their income and report that to the IRS as a deduction. This complicates the process for several reasons.

The first issue is that tipped workers’ paychecks are less straightforward than those of traditional workers. To break this down, let’s start with the two types of tips: physical cash and those paid by credit or debit card. Both are considered “cash” under the bill’s definition.

At the end of service, some patrons may still leave cash on the table for the server or bartender, but most consumers pay with credit or debit cards, so tips are recorded in the system and paid out in the earner’s paycheck alongside hourly wages. Any cash given directly to the worker should be declared at the end of the shift. However, to avoid taxation, many tipped workers report earning zero tips.

For tipped workers, the first line on the W-2 provided by their employers at the end of the year reads like everyone else’s: “Wages, tips, other compensation.” Under this process, a tipped worker would need to calculate the percentage of their income that is hourly wage versus tipped hourly wage, which varies by state, and then determine their tax rate for each category.

Once the taxpayer navigates the complicated tax code to ascertain their tax rate, submitting the amount to receive a refund isn’t how the bill is structured. These taxes must be reported in the deduction section of the tax process, similar to gas receipts for work-related travel.

As noted, the limit on individual tax deductions is $25,000. This might seem unremarkable, since most tipped employees likely haven’t been taxed $25,000 in a year. What makes this cap noteworthy is that it matches the standard deduction most taxpayers take when filing their taxes.

Why is this important? While it is unlikely a tipped worker will receive $25,000 in tips in a year, it is also unlikely that someone in a tipped wage job will use the deduction process for other expenses that would push their total deductions above this threshold.

This means that if a tipped worker painstakingly calculates their tip-related taxes and finds they are below the standard deduction, they will take the standard deduction, rendering their efforts unnecessary.

A Budget Lab study from Yale University estimates there are about 4 million tipped workers in the United States. These 4 million people earn an average of $32,000 per year, according to government data.

In the big picture, this means that the number of people who will actually utilize the deduction in a way that results in a tax refund will be minimal, if anyone at all. Thus, “no taxes on tips” does not provide tax relief on tipped wages — not even close. This portion of the Big Beautiful Bill is a typical political maneuver: promise big and deliver small.

This isn’t a tax cut for servers and bartenders; it’s a talking point for politicians.

Trump and Republicans repeatedly echoed the phrase “no taxes on tips” on the campaign trail. But the bill doesn’t eliminate taxes on tipped wages as promised.

If Democratic candidates in the 2026 House and Senate races can effectively communicate this to voters, they can counter any legislative agenda items Republican candidates might promote.

Combining this argument with the permanent extension of Trump’s 2018 tax cuts, which harmed the middle class, could make the big, beautiful bill a liability for the GOP in the upcoming elections.

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Nathaniel Lautier is a political journalist based in Florida. He is currently completing a Bachelor’s degree in Political Science at Flagler College in St. Augustine. As a veteran of the United States Air Force, Nathaniel previously served as an intelligence analyst before pursuing a career in journalism.