[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8785 Introduced in House (IH)]
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118th CONGRESS
2d Session
H. R. 8785
To amend the Internal Revenue Code of 1986 to provide that tips shall
not be subject to income or employment taxes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 18, 2024
Mr. Massie (for himself, Mr. Gaetz, and Ms. Greene of Georgia)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide that tips shall
not be subject to income or employment taxes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Tax Free Tips Act
of 2024''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. TIPS NOT SUBJECT TO INCOME OR EMPLOYMENT TAXES.
(a) In General.--Section 102 (relating to gifts and inheritances)
is amended by adding at the end the following new subsection:
``(d) Tips.--For purposes of subsection (a), tips shall be treated
as property transferred by gift.''.
(b) Exclusion From Social Security Taxes.--
(1) Social security taxes.--
(A) Paragraph (12) of section 3121(a) is amended to
read as follows:
``(12) tips;''.
(B) Section 3121 is amended by striking subsection
(q) (relating to tips included for both employee and
employer taxes).
(C) Subsection (a) of section 3102 is amended by
striking ``; and an employer who is furnished by an
employee a written statement of tips (received in a
calendar month) pursuant to section 6053(a) to which
paragraph (12)(B) of section 3121(a) is applicable may
deduct an amount equivalent to such tax with respect to
such tips from any wages of the employee (exclusive of
tips) under his control, even though at the time such
statement is furnished the total amount of the tips
included in statements furnished to the employer as
having been received by the employee in such calendar
month in the course of his employment by such employer
is less than $20''.
(D) Section 3102 is amended by striking subsection
(c) (relating to special rule for tips).
(E) Subsection (a) of section 3202 is amended by
striking the second sentence.
(2) Tier 1 railroad retirement.--
(A) Section 3202 is amended by striking subsection
(c).
(B) Paragraph (3) of section 3231(e) is amended to
read as follows:
``(3) Solely for purposes of the taxes imposed by section
3201 and other provisions of this chapter insofar as they
relate to such taxes, the term `compensation' shall not include
tips.''.
(C) Section 3231 is amended by striking subsection
(h).
(c) Exclusion From Unemployment Compensation Taxes.--Subsection (s)
of section 3306 is amended to read as follows:
``(s) Tips Not Treated as Wages.--For purposes of this chapter, the
term `wages' shall not include tips.''.
(d) Exclusion From Wage Withholding.--
(1) Paragraph (16) of section 3401(a) is amended to read as
follows:
``(16) tips;''.
(2) Section 3401 is amended by striking subsection (f).
(3) Section 3402 is amended by striking subsection (k).
(e) Tips Defined.--Subsection (a) of section 7701 (relating to
definitions) is amended by adding at the end the following new
paragraph:
``(51) Tips.--The term `tips' includes any gratuity
provided to a salaried employee by a customer or client of the
employer's business.''.
(f) Conforming Amendments.--
(1) Clause (i) of section 32(c)(2)(A) (defining earned
income) is amended by striking ``tips,''.
(2)(A) Section 45B (relating to credit for portion of
employer social security taxes paid with respect to employee
cash tips) is hereby repealed.
(B) The table of sections for subpart D of part IV
of subchapter A of chapter 1 is amended by striking the
item relating to section 45B.
(C) Subsection (b) of section 38 is amended by
striking paragraph (11) and by redesignating the
succeeding paragraphs accordingly.
(D) Subsection (c) of section 196 is amended by
striking paragraph (8) and by redesignating the
succeeding paragraph accordingly.
(E) Subsection (m) of section 6501 is amended by
striking ``45B,''.
(3) Section 220(b)(4)(A) is amended by striking ``tips,''.
(4) Section 451 is amended by striking subsection (c).
(5) Section 6001 is amended by striking the last sentence.
(6) Section 6041 is amended by striking subsection (e).
(7) Subsection (c) of section 6041A is amended by striking
``, 6052, or 6053'' and inserting ``or 6052''.
(8) Subsection (a) of section 6051 is amended by striking
``In the case of tips received by an employee in the course of
his employment, the amounts required to be shown by paragraphs
(3) and (5) shall include only such tips as are included in
statements furnished to the employer pursuant to section
6053(a).''.
(9) Section 6053 (relating to tip reporting) is hereby
repealed.
(10) The table of sections for subpart C of part III of
subchapter A of chapter 61 is amended by striking the item
relating to section 6053.
(11) Section 6652 is amended by striking subsection (b)
(relating to failure to report tips).
(12) Section 6674 (relating to fraudulent statement or
failure to furnish statement to employee) is amended by
striking ``or 6053(b)'' each place it appears.
(13) Subparagraph (B) of section 6724(d)(1) is amended by
striking clause (xvi) and redesignating the succeeding clauses
accordingly.
(14) Paragraph (2) of section 6724(d) is amended by
striking subparagraph (X) and redesignating the succeeding
subparagraphs accordingly.
(g) Effective Date.--The amendments made by this section shall
apply to tips received in calendar months beginning after the date of
the enactment of this Act.
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