73 verifiable claims checked. Federal mechanic anchored on verbatim statutory text — IRC § 224(a), § 224(c)(1), § 224(c)(2), § 224(d) — quoted from Cornell LII, with cross-references to the parent no-tax-on-overtime fact-check for shared mechanics (Schedule 1-A placement, MAGI phase-out, December 2028 sunset). Final regulations citation (TD 10044; 91 F.R. 19026; effective June 12, 2026) sourced from the Federal Register. State-conformity divergences from § 225 (overtime) — Colorado's tip-passthrough despite OT add-back, New York's pending SB S587-A, Georgia's state-level $1,750 tip exclusion — confirmed against state legislature sites and Treasury Department primary sources. Restaurant Law Center v. U.S. Department of Labor (No. 23-50562, 5th Cir. Aug. 23, 2024) sourced from Justia's appellate-court record.
66 claims ✓ Verified (including primary-statutory-text-quoted claims for § 224(a), § 224(c)(1), § 224(c)(2), § 224(d), and quoted regulatory text from TD 10044). 7 claims ⚠ Partial — each is either a single-source attribution where the article body discloses the attribution, or a pending-status state-legislative claim with a currency caveat already visible in the prose. 0 ✗ Issues. 0 🕐 Outdated.
28 claims
§ 224(a) text verbatim — grant of the deduction
§ 224(c)(1) text verbatim — qualified tips definition
§ 224(c)(2) text verbatim — "cash tips" definition
§ 224(d) text verbatim — sunset
TD 10044 final regs — cash equivalents definition (verbatim)
IRC § 224 added by OBBBA Section 70201; P.L. 119-21 signed July 4, 2025
§ 224 is below-the-line; reduces federal taxable income but NOT federal AGI
Schedule 1-A flows to Form 1040 line 13b; § 224 lives there
MAGI phase-out — $100 per $1,000 above $150,000 single / $300,000 joint
MAGI = AGI + § 911 + § 931 + § 933 exclusions
Married filing separately disqualifies; joint filers share the $25K cap
Deduction available whether the taxpayer takes the standard deduction or itemizes
§ 224 sunsets December 31, 2028 — four tax years (2025-2028)
TD 10044 published April 13, 2026; 91 F.R. 19026-19056; effective June 12, 2026
Final regs adopt the September 22, 2025 proposed regs (REG-110032-25) without substantive change
70+ qualifying occupations enumerated as Treasury Tipped Occupation Codes (TTOCs)
December 31, 2024 occupation cutoff — newly-tipping occupations cannot be added administratively
IRS Notice 2025-69 (Nov 21, 2025) — 2025 transition relief; W-2 unchanged for 2025; voluntary Box 14 disclosure permitted
2026 W-2 Box 12 code TP — total amount of cash tips reported to the employer (mandatory tax year 2026)
2026 W-2 Box 14b — Treasury Tipped Occupation Code; up to two codes per employee; "000" for non-qualifying occupations
IRC § 6051(a)(18) is the statutory basis for Box 12 code TP tip reporting
IRC § 6053 — tip reporting to employer at $20/month threshold
Form 4137 — Social Security and Medicare Tax on Unreported Tip Income; alternative reporting path qualifies for § 224
IRC § 6041A(e)(3) — 1099-NEC reporting path qualifies for § 224
IRC § 6050W(f)(2) — 1099-K reporting path qualifies for § 224
FLSA § 3(m) — federal tip credit framework; 29 U.S.C. § 203(m)
FLSA "tipped employee" definition — $30/month threshold
29 CFR § 516.6 — tip records; daily/weekly tip records, tip-credit notice, tip-pool allocation
1 claim
$25,000 deduction cap per return (single or joint)
1 claim
Fully phased out at $400,000 single / $550,000 joint MAGI
1 claim
TTOC 101 (Bartenders), TTOC 102 (Wait Staff), TTOC 603 (Hairdressers / Barbers / Cosmetologists)
1 claim
Blank Box 14b may cause IRS to reject the worker's "no tax on tips" claim
3 claims
IRC § 6721 penalty — $310 per incorrect or omitted W-2 (2026 figure); annual cap $3.78M per employer
2026 single standard deduction $16,100; 10%-bracket ceiling $12,400 (post-OBBB)
Federal minimum wage $7.25/hour; tipped cash wage $2.13/hour; tip credit $5.12/hour
1 claim
DOL Field Operations Handbook — service charges are NOT tips; voluntary vs mandatory distinction
11 claims
California SB 711 — Chapter 231 of 2025 Statutes, signed October 1, 2025; conformity date 1/1/2025
California Labor Code § 351 — tips are property of the employee
California prohibits the federal tip credit; full state minimum wage required
Colorado HB 25-1296 — signed by Gov Polis May 16, 2025; adds back federal § 225 (overtime) deduction; effective tax year 2026; CRS § 39-22-104 amended; ~$119M annual revenue protection
Georgia HB 463 — signed by Gov Kemp May 11, 2026; "Georgia Economic Growth and Tax Relief Act of 2026"; $1,750 state-level tip exclusion (and $1,750 OT exclusion) for tax years 2026-2028
Idaho HB 559 — Gov Brad Little signed; conforms to OBBBA including § 224 tips deduction; 2025 returns filed from March 3, 2026 with conformity deductions
Oregon SB 1507 — signed by Gov Tina Kotek April 9, 2026; affirmatively retained federal § 224 and § 225 passthrough
Oregon Capital Chronicle reporting is the most-cited source for SB 1507's tips + OT carve-out; primary Oregon Legislature bill page should be the long-term anchor. Single Tier-3 source on a high-stakes state-conformity claim.
Maine — Gov Mills Determination October 1, 2025; P.L. 2025 c. 336; LD 2010 pending Taxation Committee; explicit rejection of tips + OT conformity
New York IT-225 add-back codes for federal exempt overtime and exempt tip income
New York Gov Hochul introduced SB S587-A on January 8, 2026 — proposed $25,000 state-level tip exemption
Status pending as of late March 2026 per CT Mirror coverage. Article body discloses pending status. Currency caveat: re-verify before publish if more time elapses.
South Carolina — SCDOR currently requires add-back for federal § 224; H 3368 and H 4216 both pending
Article body explicitly flags SC posture as "contested" and most volatile in the country; re-verify before publish if more time elapses.
1 claim
Colorado conforms to federal § 224 (tips) — no parallel add-back legislation enacted
1 claim
Arizona Gov Hobbs Executive Order 2025-15 — issued November 25, 2025; directs ADOR to add § 224, § 225, and other OBBBA deductions to Form 140
Practitioner commentary explicitly flags the EO as legally precarious (no enacted statute). Article body discloses this caveat.
1 claim
Illinois Department of Revenue — administrative add-back required for federal § 224 and § 225
2 claims
Restaurant Law Center v. U.S. Department of Labor, No. 23-50562 (5th Cir. August 23, 2024) — vacated DOL's December 2021 80/20/30 Tip Credit Rule nationwide
5th Cir applied the Loper Bright standard (SCOTUS, June 2024) — overruled Chevron deference
1 claim
Pre-2021 standard — tip credit available when worker is "engaged in a tipped occupation"
6 claims
California — approximately $3.2 billion aggregate annual revenue protection from combined OT + tips non-conformity
$3.2B is the aggregate figure for combined OT + tips non-conformity. Article body cites it as aggregate without claiming a per-deduction split — the source-to-claim match is clean. CA FTB has not published a disaggregated OT-vs-tips breakdown.
Colorado — approximately $90 million annual revenue cost from § 224 (tips) passthrough
Single-source attribution for this specific number. ITEP is an established independent research organization. Colorado DOR has not published an official projection for § 224 passthrough specifically (vs the § 225 add-back projection of ~$119M per Colorado Legislative Council Staff).
Idaho — approximately $167.4 million annual revenue impact for tax year 2026 from § 224 conformity (Tax Foundation estimate)
Tax Foundation $167.4M figure is the primary citation for Idaho's tax-year-2026 conformity impact; Idaho Center for Fiscal Policy reports approximately $284.4M aggregate annual loss across all OBBB conformity (not just tips). Two independent research organizations; both Tier 2.
New York City — approximately $239 million annual projected revenue loss if SB S587-A enacts
CT Mirror is the most-cited source for this specific NYC-only figure; NYC OMB / Department of Finance has not published a parallel projection in the sources reviewed. Single Tier-3 source on a high-stakes claim; reader should treat as journalism-level estimate.
South Carolina H 3368 — approximately $534.1 million projected revenue reduction FY 2026-27 if SC conforms
South Carolina H 4216 — approximately $309 million initial revenue loss in 2026 (ITEP analysis)
Single Tier-2 source on a high-stakes fiscal claim. SC State House primary impact statement for H 4216 not surfaced as separate primary; ITEP's methodology is published and transparent.
5 claims
31 states + DC start state taxable income from federal AGI
5 states start state taxable income from federal taxable income (Colorado, Idaho, North Dakota, Oregon, South Carolina)
5 states use their own income classes — Alabama, Arkansas, Mississippi, New Jersey, Pennsylvania
7 states prohibit the federal tip credit (Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington)
9 no-income-tax-on-wages states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
1 claim
4 § 224 passthrough states — Oregon, Colorado, Idaho, North Dakota
4 claims
"As of May 2026" framing — SC posture contested; NY SB S587-A pending; Maine LD 2010 pending; Arizona EO 2025-15 legally precarious
Each pending-status claim names its own bill / EO + verification date. Article body discloses pending status visibly.
TD 10044 effective June 12, 2026 — tax year 2026 W-2 reporting under final regs
§ 224 sunset — December 31, 2028; tax year 2029 returns to ordinary taxable income
Tax year 2025 — W-2 unchanged; employees calculate deduction from pay records; voluntary Box 14 disclosure permitted
2 claims
Yale Budget Lab analysis — approximately 37% of tipped workers earned too little to face federal income tax in 2022 (even before tax credits)
Yale Budget Lab is an established institutional research source. The 37% figure is from Yale Budget Lab's June 2024 analysis of the No Tax on Tips Act proposal; the underlying data is from tax-year 2022. Article body attributes the figure to Yale Budget Lab directly. Single primary source; no independent corroboration of the exact 37% figure surfaced in the source review.
California FTB November 2025 Tax News bulletin — confirmed CA does not conform to "no tax on tips"
1 claim
IRS Fact Sheet FS-15-08 — tips vs service charges distinction (voluntary vs mandatory)
1 claim
Payroll vendors released OBBBA-ready updates supporting Box 12 code TP and Box 14b TTOC
Article body now uses generic "your payroll vendor's OBBBA-update bulletin" framing — the underlying fact (the 2026 W-2 boxes exist and require vendor implementation) is verifiable from the IRS form instructions + PayrollOrg coverage of the January 12, 2026 W-2 release.
74 unique sources cited across the report — click to audit any claim directly against its evidence.
7 ⚠ Partial entries appear above with notes. Each is a single-source attribution or pending-status claim where the article body already discloses the caveat in the prose. None requires structural article revision; the partial-status notations make the limits of verification visible to the reader.
Yale Budget Lab single-source attribution on tipped-worker income-tax distribution. Article cites the 37% figure with explicit Yale Budget Lab attribution. Suggested revision: none — the attribution model handles the single-source nature. Yale Budget Lab is an institutional research organization with transparent methodology.
Oregon SB 1507 source is Tier 3 journalism (Oregon Capital Chronicle). The bill itself has not been linked to a primary Oregon Legislature page in this report. Suggested revision: locate the primary Oregon Legislature bill page for SB 1507 and add as the canonical source; keep Oregon Capital Chronicle as a secondary contextualizer.
New York SB S587-A pending-status currency caveat. Status is "introduced January 8, 2026; pending Senate Budget+Revenue Committee" as of late March 2026. The bill could pass at any time during the 2026 NY budget process. Suggested revision: re-verify status immediately before publish; update the article body's pending-status language if the bill has moved between report date and publish date.
Colorado $90M tips passthrough cost cites ITEP only. No Colorado DOR primary projection has been published for § 224 specifically (only the § 225 add-back projection of ~$119M). Suggested revision: explicitly attribute the $90M to ITEP at point of use; the article body does this.
Idaho $167M Tax Foundation projection is single-source for the specific figure. Idaho Center for Fiscal Policy reports $284.4M aggregate for all OBBB conformity, not just § 224 — corroborates the order of magnitude but not the specific tips number. Suggested revision: rephrase as "Tax Foundation estimates approximately $167M annual revenue impact for tax year 2026" with explicit attribution at point of use (the article body does this).
NYC $239M annual projection if SB S587-A enacts is single-source (Tier 3 journalism). CT Mirror is the cited source. NYC OMB / Department of Finance has not published a parallel projection in the sources reviewed. Suggested revision: re-verify before publish if a primary NYC fiscal projection becomes available.
South Carolina H 4216 ITEP $309M analysis is single-source on a high-stakes fiscal claim. ITEP's methodology is transparent and published; SC State House primary impact statement for H 4216 not surfaced. Suggested revision: cite ITEP explicitly at point of use; re-verify if SC State House publishes a parallel projection.
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