HR1314-119

2. Repeal of separate minimum wage for tipped employees Section 3(m)(2)(A) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)(2)(A)) is amended to read as follows: The wage required to be paid to a tipped employee shall be the wage set forth in section 6(a)(1). All tips received by such employee shall be retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips. Section 16 of the Fair Labor Standards Act of 1938 (29 U.S.C. 216), as amended by this Act, is further amended— in subsection (b), by striking the sum of any tip credit taken by the employer and all such tips unlawfully kept by the employer and inserting the sum of all such tips unlawfully used or kept by the employer; and in subsection (c), by striking the sum of any tip credit taken by the employer and all such tips unlawfully kept by the employer and inserting the sum of all such tips unlawfully used or kept by the employer. (A)The wage required to be paid to a tipped employee shall be the wage set forth in section 6(a)(1). All tips received by such employee shall be retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips..

3. Deduction for cash tips Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section: There shall be allowed as a deduction an amount equal to the amount of qualified tips received during the taxable year that are included on statements furnished to the employer pursuant to section 6053(a). No deduction shall be allowed under subsection (a) to any individual for any taxable year if the adjusted gross income of such individual for such taxable year exceeds $112,500. For purposes of this section, the term qualified tips means a tip received by an individual— from an unrelated party, who does not have an ownership stake in the business which employs them in the job in for which such individual is receiving a tip, and in the course of such individual’s employment in an occupation which traditionally and customarily received tips, including— cosmetology, hospitality, food and beverage service, parking attendants, and custodial service. The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by redesignating the item relating to section 224 as relating to section 225 and by inserting after the item relating to section 223 the following new item: Section 63(b) of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting and, and by adding at the end the following new paragraph: the deduction provided in section 224. Section 67(b) of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting , and, and by adding at the end the following new paragraph: the deduction under section 224 (relating to cash tips). Section 68(c) of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , and, and by adding at the end the following new paragraph: the deduction under section 224 (relating to cash tips). The Secretary of the Treasury (or the Secretary's delegate) shall modify the tables and procedures prescribed under section 3402(a) of the Internal Revenue Code of 1986 to take into account the deduction allowed under section 224 of such Code (as added by this Act). The amendments made by this section shall apply to taxable years beginning after December 31, 2025. 224.Cash tips(a)In generalThere shall be allowed as a deduction an amount equal to the amount of qualified tips received during the taxable year that are included on statements furnished to the employer pursuant to section 6053(a).(b)LimitationNo deduction shall be allowed under subsection (a) to any individual for any taxable year if the adjusted gross income of such individual for such taxable year exceeds $112,500.(c)Qualified tipsFor purposes of this section, the term qualified tips means a tip received by an individual—(1)from an unrelated party,(2)who does not have an ownership stake in the business which employs them in the job in for which such individual is receiving a tip, and(3)in the course of such individual’s employment in an occupation which traditionally and customarily received tips, including—(A)cosmetology,(B)hospitality,(C)food and beverage service,(D)parking attendants, and(E)custodial service.. Sec. 224. Cash tips.. (5)the deduction provided in section 224.. (13)the deduction under section 224 (relating to cash tips).. (4)the deduction under section 224 (relating to cash tips)..

224. Cash tips There shall be allowed as a deduction an amount equal to the amount of qualified tips received during the taxable year that are included on statements furnished to the employer pursuant to section 6053(a). No deduction shall be allowed under subsection (a) to any individual for any taxable year if the adjusted gross income of such individual for such taxable year exceeds $112,500. For purposes of this section, the term qualified tips means a tip received by an individual— from an unrelated party, who does not have an ownership stake in the business which employs them in the job in for which such individual is receiving a tip, and in the course of such individual’s employment in an occupation which traditionally and customarily received tips, including— cosmetology, hospitality, food and beverage service, parking attendants, and custodial service.