"From 2025 through 2028, drivers in certain tipped occupationsincluding taxi, rideshare, limousine, shuttle, and tour bus driverscan deduct up to $25,000 per year in qualified tips from their taxable income. That means more money stays in drivers' pockets instead of going to the IRS. Tour guides and travel directors also appear on the list. Absent, however, are public transit bus drivers, intercity bus operators, and school bus drivers."
"The OBBBA also makes overtime pay less painful at tax time. Drivers can deduct the extra half portion of their overtime premium (the time-and-a-half rate required by the Fair Labor Standards Act) up to $12,500 per year, or $25,000 for joint filers. For drivers putting in long hours behind the wheel, that translates directly into more disposable income. For passengers, it means their tips for these drivers go further than ever."
"The U.S. Treasury Department and the Internal Revenue Service (IRS) have released proposed rules clarifying how the no tax on tips provision will function, spelling out nearly 70 occupations that customarily and regularly receive tips, including many drivers in the for-hire transportation industry. At the heart of the law is a new federal tax break on tips and overtime pay. This change will reshape how drivers earn, and how passengers support them."
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, creates a federal tax break on tips and overtime pay. The Treasury and IRS released proposed rules listing nearly 70 occupations that customarily receive tips, including many for-hire drivers. From 2025 through 2028, eligible taxi, rideshare, limousine, shuttle, and tour bus drivers can deduct up to $25,000 per year in qualified tips from taxable income. Public transit, intercity, and school bus drivers are excluded. The law also allows a deduction of the extra half of overtime pay up to $12,500 per filer or $25,000 for joint filers, increasing disposable income for long-hour drivers and ensuring tips reach drivers more directly while fares remain unchanged.
Read at www.amny.com
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