(a) In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:

139J. Certain tipped wages

(a) In general

Gross income shall not include so much of the eligible tips received by an individual during the taxable year as does not exceed $20,000.

(b) Eligible tips

For purposes of this section, the term eligible tips means amounts received while performing services which constitute employment in a position which generally relies on tips as part of wages, including cosmetology, hospitality, and food service.

(c) Denial of double benefit

(1) In general

Except as provided in paragraph (2), any amount which is excluded from gross income under this section shall not be taken into account in determining any deduction or credit under this chapter.

(2) Exception for child tax credit; earned income credit

The amount excluded from gross income under this section shall be taken into account for purposes of determining the credits under sections 24 and 32.

(d) Termination

This section shall not apply to tips received after December 31, 2029.

(b) Withholding

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 amounts excludible from gross income under section 139J of such Code (as added by this Act).

(c) Clerical amendment

The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item:

(d) Effective date

The amendments made by this section shall apply to amounts received after December 31, 2024.