The rules for paying taxes on tips and overtime are changing thanks to Trump’s Big Beautiful Bill. Here’s what to expect

Personal Finance·TaxesThe rules for paying taxes on tips and overtime are changing thanks to Trump’s Big Beautiful Bill

Here’s what to expectBY Alicia AdamczykBY Alicia AdamczykSenior WriterAlicia AdamczykSenior WriterAlicia Adamczyk is a New York City-based senior writer at Fortune, covering personal finance, and retirement

SEE FULL BIO Tax experts say there are a few nuances of the no tax on tips and overtime law that workers should know ahead of next tax season

Grace CaryPresident Donald Trump’s campaign mises to end taxes on tips and overtime pay have seemingly come to fruition in the GOP’s “One Big Beautiful Bill” that became law Friday

But tax experts say there are a few nuances of the law workers should know ahead of next tax season

Both visions have the potential to be worth thousands of dollars, depending on the individual taxpayer’s situation and how much they earn

That fact is music to the ears of workers who are struggling to pay higher prices for just everything

But there is also the possibility they could cause tension among employees at the same company who could now be taxed differently, undermining tax fairness, says Marc Gerson, member at Miller & Chevalier and former majority tax counsel for the House Ways and Means Committee

Why should a server in a restaurant, for example, be exempt from paying taxes while a retail worker earning the same amount is not

The visions “arbitrarily reward some workers over others facing the same financial circumstances,” writes Abir Mandal, senior policy analyst at the right-leaning Tax Foundation

This, in turn, “disadvantages workers unable to access tipped or overtime-heavy roles, such as those with caregiving responsibilities or fixed schedules. ” Still, they have garnered widespread support among both Democrats and Republicans

Here’s what taxpayers need to know

Anything over that does not qualify, and this is not a total exclusion from paying taxes—where applicable, workers will still owe state, local, and payroll taxes that go toward Social Security and Medicare

That said, it could still be worth thousands of dollars a year in federal taxes that tipped workers no longer have to pay

Exactly what service roles qualify under the legislation is still being hashed out

It is now up to the Treasury Department and IRS to write the regulations for es and individual taxpayers to, and to list the jobs that qualify for the deduction

Workers—are traditionally considered tipped workers

There is some worry among experts and economists that the policies could encourage some es and workers to change their pay structure to receive more in tips or overtime pay

Just when Americans are growing more and more fatigued at being asked to tip at seemingly every interaction, this change could supercharge the practice

Es may also need to rework how they report tipped income on employee tax forms

Distinguishing between regular wages, tips, overtime, and bonuses adds additional work for employers to absorb, Mandal notes, as well as government revenue departments

Many of the nuances of the tipped vision also apply here, including that both the taxpayer and their spouse need Social Security numbers to qualify, experts say

For example, overtime mised under a collective bargaining agreement would fall under a contract, while California has a state law requiring daily overtime for hours worked in excess of eight in one day

More information on exactly what jobs the visions apply to will be made available in the months ahead

Explore this year's list.