A worker who claims the full $7,100 deduction for tipped income under Trump’s 2025 tax law will not save $7,100 in taxes — they’ll save at most $1,704, if they’re in the 24% federal tax bracket.
Related Brief 1d ago
fiscal policy The $100 Tips Tax Cut Promotiony
Independent delivery drivers are implementing measures to cope with rising gas prices. This is the result of surging oil prices that have driven fuel costs higher, offsetting the effects of the tax cuts on tips, overtime pay, car loan interest, and state and local tax bills. These cuts were part of last year's Republican-backed tax-cut legislation, which also included cuts to taxes on Social Security retirement payments. President Donald Trump, promoting these cuts, had McDonald's food delivered to the Oval Office on Monday. He handed the DoorDash driver, Sharon Simmons, what appeared to be a $100 bill after she was asked if White House staff were good tippers.
President Trump signed the One Big Beautiful Bill Act on July 4, 2025, touting it as a historic win for workers, especially those who rely on tips. The law provides a tax deduction of up to $7,100 for tipped income through 2028. The White House says more than 5.5 million Americans have benefited, with an average deduction exceeding $7,100.
Related Brief 16h ago
social security One Big Beautiful Bill Act Moves Social Security Insolvency to 2s032
A typical couple turning 60 in 2025 faces an annual reduction of $18,400 in their Social Security benefits, a 24% cut. This reduction is driven by the projected depletion of the Old-Age and Survivors Insurance (OASI) Trust Fund by 2032, a two-year acceleration from previous projections of 2033. The Congressional Budget Office and the Committee for a Responsible Federal Budget estimate insolvency by that date. The acceleration is caused by the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025. The act introduces a $6,000 senior deduction that reduces revenue from taxing benefits and implements mass deportation policies that shrink the workforce, reducing payroll tax revenue. The Social Security Office of the Chief Actuary Actuary estimates these changes will reduce program revenue by $168.6 billion between 2025 and 2034. This reduction in revenue reflects the cost of the $6,000 senior deduction and the loss of payroll taxes from a shrunken workforce.
But deductions are not dollar-for-dollar tax savings. The actual reduction in tax liability depends on a worker’s marginal tax rate. Most tipped workers fall in the 12% or 22% federal tax brackets. For someone in the 22% bracket claiming the full $7,100, the savings would be $1,562.
Related Brief 4h ago
retirement planning Proposed Social Security Reforms Target Investment Income and AI Productivity to Prevent 2032 Fund Depletion
Social Security benefits are projected to run out in 2032, according to the Social Security Administration. Current funding relies on payroll taxes of 6.2% for employees and employers. High-net-worth Americans derive much of their income from stocks, which are not subject to payroll taxes. A tax on high investment income above a certain threshold would redirect funds to Social Security. AI automation leads to productivity gains and cost reductions for companies. A universal dividend paid via royalties from AI companies would redirect funds to Social Security. All retirees currently receive annual cost-of-living adjustments regardless of income level. Progressive cost-of-living adjustments would reduce the COLA for higher-income recipients. A targeted consumption tax on discretionary spending would increase funding for Social Security.
At a White House event, DoorDash driver Sharon Simmons said she “saved over $11,000 by not having to claim” — later clarifying that $11,000 was her total tip income, not her tax savings. Joseph Rosenberg of the Tax Policy Center calculated that even if she were in the 24% bracket, her tax savings would max out at $2,640.
Related Brief 9h ago
retirement planning Social Security beneficiaries face a 23 percent benefit cut by 2033
Social Security beneficiaries will face a 23 percent benefit cut if Congress does not act to address the funding shortfall. Total scheduled benefits will drop to 77 percent after 2033. This shortfall occurs because the program's cost has exceeded its cost has exceeded its non-interest income since 2010, which has depleted the Social Security trust funds. According to the 2025 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, the Social Security Administration will be able to pay 100 percent of total scheduled benefits only until 2033.
The $7,100 figure cited by the White House reflects the average deduction taken, not the average refund. Many workers earn less than $7,100 in tips and cannot claim the full amount. Others are in lower tax brackets, further reducing their savings.
Related Brief 1h ago
cryptocurrency White House Signals Finality on CLARITY Act Crypto Regulation
The Senate floor is expected to hold a vote on the CLARITY Act by late May. This follows the expected release of an updated stablecoin yield compromise draft by Senator Thom Tillis this week. The White House crypto adviser, Patrick Witt, stated that negotiations have cleared most remaining obstacles, including the DeFi rules and ethics provisions that had previously been viewed as intractable. The stablecoin yield dispute, which dominated headlines for three months, is largely settled under the Tillis-Alsobrooks framework. The bill cleared the House in July 2025 by a 294 to 134 vote and the Senate Agriculture Committee in January 2026. The Banking Committee must now set a markup date. Following the committee vote, the Banking and Agriculture Committee versions must be reconciled, and the combined Senate text must be reconciled with the House version before a presidential signature. The CLARITY Act becomes law after reconciliation and presidential signature.
The policy expires in 2028.
Related Brief 2h ago
social security reform Social Security's insolvency date moves up as tax and immigration policies shrink incoming revenue
A typical couple who turned 60 in 2025 could lose $18,400 a year in Social Security benefits if lawmakers fail to act as the program’s finances deteriorate. That would amount to a 24% cut in their expected income, according to the Committee for a Responsible Federal Budget. The timeline for that shortfall has moved closer: the Congressional Budget Office now projects the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund will be depleted by 2032, one year earlier than the 2033 date in the June 2025 Social Security Trustees Report. The nonpartisan Committee for a Responsible Federal Budget also estimates insolvency by late 2032. The shift follows the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025. The law’s $6,000 senior tax deduction reduces federal revenue from taxation of Social Security benefits—part of a broader funding stream that supplements payroll taxes. The Social Security Office of the Chief Actuary found the OBBBA will reduce Social Security revenue by $168.6 billion between 2025 and 2034. That loss accelerates the trust fund’s depletion. The law’s immigration restrictions compound the problem. By reducing the size of the workforce through mass deportations, fewer wage-earners will pay into Social Security via payroll taxes. A shrinking labor force, already pressured by declining birth rates, means less incoming revenue. Without intervention, benefit cuts become more likely. The CRFB warns that without reforms, reductions could be severe. Options include a broader employer tax, capping cost-of-living adjustments for higher-income beneficiaries, adjusting the benefit formula, or raising the full retirement age. But changes take time to phase in, especially those affecting older workers. The window for action is narrowing. Social Security has never implemented broad benefit cuts before, and lawmakers may yet act to prevent them. But with the trust fund now on track to run dry by late 2032, planning for reduced benefits is prudent—even if cuts are ultimately avoided.
The Ledger Morning The essential intelligence to start your trading day. Delivered 6:00 AM EST.
Join 50,000+ professionals who start their day with The Digital Ledger.
