What the “No Tax on Tips” Rule Means for Tipped Workers in Green Bay and De Pere

In July 2025, a new federal law known as the One Big Beautiful Bill (OBBB) introduced a wide range of tax reforms—including a significant and headline-grabbing provision called the “no tax on tips” deduction. If you’re a tipped worker in the Green Bay or De Pere area, this change could directly impact your next tax return. Here’s what you need to know—and how you can prepare.

The “no tax on tips” provision is structured as a federal income tax deduction, not a full exemption from taxes. This distinction matters: it reduces your taxable income, not your total earnings. The deduction is capped at $25,000 annually and applies whether you itemize or take the standard deduction. For most taxpayers in tipped professions—like servers, bartenders, and salon workers—this could result in real savings.

That said, it’s not automatic. You must report your tips through an official IRS form (W-2, 1099, or 4137), and the occupation must have customarily and regularly received tips before 2025. Treasury is expected to release an official list of qualifying occupations by October 2, 2025. For taxpayers in Green Bay and De Pere, this is a good reason to stay in close contact with your tax preparation professional to confirm your eligibility as new guidance is released.

How Much Could You Save?

The amount you’ll save depends on your income level and how much of it comes from tips. A single taxpayer earning $50,000 with $5,000 in tips could see about a $600 reduction in their tax bill. For someone earning $75,000 with $10,000 in reported tips, the benefit could reach $2,200. However, the deduction begins phasing out at higher income levels—$150,000 for singles and $300,000 for married couples—and disappears entirely by $400,000 and $550,000 respectively.

It’s also important to note that this deduction doesn’t eliminate payroll taxes like Social Security and Medicare on tip income, nor does it change state income tax obligations. So, residents in Wisconsin will still need to report and possibly pay state taxes on their tips depending on their total income. This is one more reason to work with a tax preparation expert in De Pere or Green Bay who understands both federal and state nuances.

Limitations and Fairness Questions

There are also equity concerns built into the policy. For example, imagine three friends in Green Bay: one is a waitress making $40,000 a year with $5,000 in tips, another works at a grocery store, and the third is an elementary school aide. They all earn roughly the same income, but only the waitress qualifies for the deduction. While this may incentivize more people to enter tipped jobs, it also creates disparities among workers with similar earnings.

And not all low-income workers benefit. Taxpayers earning under the standard deduction threshold ($15,750 for singles and $31,500 for couples) won’t see any benefit from the tips deduction because they don’t owe federal income taxes to begin with. Still, for those above that line, especially in service-heavy economies like Green Bay, the impact could be meaningful.

Planning Ahead with Confidence

The deduction applies to tips earned from January 1, 2025, through December 31, 2028. For the 2025 tax season (filing in early 2026), most workers will see this deduction reflected as a larger tax refund. However, starting in 2026, withholding tables will be updated so that eligible workers may see higher take-home pay each paycheck instead of waiting for refund season.

Given that the law is temporary and full details—including enforcement regulations—are still evolving, it’s more important than ever to get ahead of the game with proactive tax preparation. For tipped workers in the Green Bay and De Pere communities, knowing how to track tips, report income accurately, and understand your deduction eligibility can be the difference between a missed opportunity and a maximized refund.

Need help navigating the new tips deduction or other recent tax law changes? Schedule a consultation with our De Pere-based team. We're proud to support Green Bay’s hardworking community with expert tax preparation year-round.