On July 4, 2025, Donald Trump signed the One Big Beautiful Bill Act into law, permanently extending key tax cuts and adding new provisions. The Congressional Budget Office estimates the measure could add about $3.4 trillion to the federal deficit over the next decade.
A central feature is exempting tips from federal income tax. Service workers — including restaurant staff, bartenders, and hotel employees — must still report tips, but they are no longer taxed at the federal level. Overtime pay and expanded senior deductions are also included.
Supporters say the law helps workers keep more of what they earn and provides immediate financial relief. Critics argue it may distort compensation structures and increase long-term deficits.
The law reflects a tax-cut-focused approach to economic policy, offering short-term gains to tipped workers while raising ongoing concerns about fiscal sustainability and fairness.
