Big news for New Yorkers working in service industries: the new ‘No Tax on Tips’ law has officially arrived. Part of the broader “One Big Beautiful Bill” passed earlier this year, this legislation brings major tax relief for workers who rely on tips. If you work in hospitality, entertainment, or similar fields, here’s exactly what this law means for your wallet.
And it’s not just this new federal tax change—New York State continues to roll out local financial support programs, offering tax credits, rebates, and expanded benefits that aim to make life more affordable for families and working-class residents alike.
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Launch
The ‘No Tax on Tips’ law is now in effect and is part of a national tax package aimed at reducing the tax burden on tipped workers. It allows employees in qualifying service sectors to deduct up to $25,000 in tips from their taxable income starting January 2025 through January 2028.
That means more money in your pocket, less owed at tax time, and potentially bigger refunds come filing season.
Here’s who qualifies.
Workers
If you’re in one of the following sectors, this law directly benefits you:
- Food & Beverage Service (waitstaff, bartenders)
- Entertainment & Events (ushers, performers, event staff)
- Hospitality & Guest Services (hotel workers, front desk)
- Transportation & Delivery (rideshare, delivery drivers)
- Home Services (cleaners, landscapers)
- Personal Services (nannies, pet sitters)
- Wellness & Personal Appearance (barbers, nail techs)
- Recreation & Instruction (fitness trainers, coaches)
Basically, if a portion of your income comes from customer tips, you’re likely eligible.
And yes, updated W-2 and 1099 forms reflecting these changes will be distributed to employers beginning in January 2025.
Relief
This is just one piece of New York’s broader push to improve affordability for working families. Governor Kathy Hochul’s administration has rolled out several financial programs designed to put more money back in residents’ pockets.
Here are some recent highlights:
| Initiative | Impact |
|---|---|
| Expanded Child Tax Credit | Up to $1,000 per child for 118,000 Western NY families |
| Middle-Class Tax Cuts | Income tax relief for 507,000+ New Yorkers |
| $2.2B Childcare Investment | Increased access to affordable childcare statewide |
| Inflation Rebate Checks | Up to $400 for eligible households |
These are real programs already in motion, not rumors or future promises. Families across the state are already seeing this relief reflected in their wallets.
STAR
In addition to income-based programs, property owners in New York have access to another valuable benefit: the School Tax Relief (STAR) Program.
This program reduces the amount you owe on your property taxes. It’s divided into two categories:
- Basic STAR – for working homeowners
- Enhanced STAR – for senior homeowners (age 65+), often with higher rebates
To qualify, you must:
- Meet income limits set by the program
- Have filed your tax returns on time
- Apply through the New York State Department of Taxation and Finance
Combined with the new ‘No Tax on Tips’ benefit, New Yorkers in both renting and owning households have multiple avenues to keep more of their hard-earned cash.
Future
The state is also supporting the federal push for tip tax reform through broader affordability commitments—like passing legislation that helps working-class communities deal with inflation, raise children, and stay in their homes.
With the No Tax on Tips law now locked in for three years, tipped workers can finally expect consistent tax relief—something service industry workers have long called for.
Whether you’re pouring coffee, cutting hair, or driving deliveries, the playing field just got a little fairer.
FAQs
What is the ‘No Tax on Tips’ law?
It allows service workers to deduct up to $25,000 in tips from taxable income.
Who qualifies for tip tax deductions?
Workers in hospitality, food service, entertainment, and similar sectors.
When does the tips tax break start?
January 2025 through January 2028 for eligible workers.
What is the STAR rebate?
A property tax reduction for eligible NY homeowners, including seniors.
Are new W-2 forms required?
Yes, updated W-2/1099 forms will reflect new tip deduction rules.
