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FS-2026-07, March 2026
Certain provisions in the One, Big, Beautiful Bill signed into law on July 4, 2025, lessen the tax burden for gig economy workers. By making certain business deductions permanent, the new law allows gig workers to keep more of what they’ve earned.
New for gig economy workers
No tax on tips deduction
A new deduction allows eligible gig economy workers to deduct up to $25,000 in qualified tips ($25,000 per return for single filers and married couples filing jointly) from their taxable income from tax year 2025 through 2028. The IRS issued proposed regulations with a list of nearly 70 separate occupations of tipped workers that qualify for the deduction and is currently working on the finalized list. Self-employed workers may deduct qualified tips up to the amount of their net income from the trades or businesses in which the qualified tips were received. For self-employed workers, tips must be reported on Form 1099-MISC, 1099-NEC, or 1099-K to be eligible for the deduction. These forms will not separately identify qualified tip amounts for 2025, but the tip amount must still be included in the total amounts reported on these forms in order for the tip to be eligible for the deduction.
Permanent Qualified Business Income deduction
The deduction is now permanent, allowing eligible gig workers to plan long term to maximize the benefit. Certain tip income may be excluded when computing QBI.
Do you all have any tax related questions or comments? Stop by or contact us at 254-699-5600 (JimE)(CAA & Notary )starry) or 699-4209 (TomR) (EA, OIC Expert).
