The Big Beautiful Bill is here—and tucked inside the headlines is a big moment for small and mid-sized restaurants: a new “no federal income tax on tips” rule that could make life a little sweeter for your front-of-house staff.
But what does it actually mean for your business—and how can you use this to your advantage? Let’s break it down.
What Is the “No Tax on Tips” Provision, Really?
It’s not a total tax holiday, but it’s close. Under the bill:
- Tipped employees can exclude up to $25,000 in tips annually from federal income tax (as long as they make under $160,000 individually or $300,000 as a household).
- Tips are still subject to state, local, and payroll taxes—but this new rule still represents a solid financial bump for most workers.
- The exemption applies to cash tips that are properly reported—no shortcuts or skimming.
Why It Matters to Restaurant Owners
This change isn’t just good news for employees—it has ripple effects across your hiring, training, and operations.
1. Better Retention & Happier Staff
When your team takes home more of what they earn, morale goes up. And in a world where high turnover costs you time and money, that’s a big deal.
2. Stronger Hiring Advantage
If you’re struggling to find solid servers or bar staff, this rule gives you an edge. Telling potential hires they can pocket more tip income (legally!) is a competitive perk.
3. Less Back-Office Hassle
The tax relief shows up at the end of the year, but if you’re already using AccuPOS to track tips by employee and shift, you’re one step ahead. Easy reports = less friction.
What You Should Be Doing Now
| Task | Action |
| Tip Tracking | Make sure your POS tracks tips accurately by employee and shift |
| Payroll Coordination | Work with your accountant to adjust withholding where needed |
| Team Communication | Let staff know how this change benefits them, clearly and proactively |
| Compliance | Keep reporting everything. This rule rewards honesty—not shortcuts |
Where AccuPOS Comes In
If Sage is your restaurant’s financial core, AccuPOS is the operational brain that feeds it. We help you:
- Record tips cleanly and consistently
- Sync daily sales and tips directly to your accounting system
- Create reports that make year-end taxes easier for everyone
Bottom line: this new law gives tipped employees more take-home pay, and with AccuPOS, you can make sure it’s all handled smoothly, legally, and with less manual effort.
Want to see how it works?
📞 1‑800‑906‑5010
✉️ sales@accupos.com
SOURCES:
- CBS News: “The Big Beautiful Bill: No tax on tips, explained”
https://www.cbsnews.com/news/the-big-beautiful-bill-no-tax-on-tips-cbs-news-explains/ - Patriot Software: “What Is the No Tax on Tips Act?”
https://www.patriotsoftware.com/blog/payroll/no-tax-on-tips/ - National Restaurant Association: “Tax policies in the One Big Beautiful Bill will fuel the restaurant industry and US economy”
https://www.restaurant.org/research-and-media/media/press-releases/tax-policies-in-the-one-big-beautiful-bill-will-fuel-the-restaurant-industry-and-us-economy/ - Time Magazine: “No Tax on Tips Act: What it means for restaurant workers”
https://time.com/7287499/tax-tips-bill-impact-employees-businesses/ - Food & Wine: “No Tax on Tips Act Passes Senate”
https://www.foodandwine.com/no-tax-on-tips-act-passes-senate-11740391
*This blog post is for informational purposes only and does not constitute legal or tax advice. Always consult with a qualified professional for guidance specific to your business.
