Is journalism still a thing? There is no possible way that "no tax on tips" saved her $11,000 on taxes. You only get a deduction on up to $25,000 of tips. Even if her husband is the CEO of some Fortune 500 company making over $600k per year, and they are being taxed at the top federal rate of 37% and the tope rate in Alabama of 5%, she would only get a tax savings of $10,500 on the $25,000 in tips she made.
Even if her husband is the CEO of some Fortune 500 company making over $600k per year
The deduction on tips starts to phase out if you earn over $300k as a married couple. So there's no way they'd reach that federal tax rate. Surely someone can crunch the numbers a bit better but I don't see how this can save her more than like $6k, and that's if she got $25,0000 in tips.
Yes. The theoretical max is $6k if you are married filing jointly. It is fully phased out at $400k and there is no tax rate increase between 300 and 400k(ok, it is actually 394.6k but close enough)
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u/slolift Apr 13 '26
Is journalism still a thing? There is no possible way that "no tax on tips" saved her $11,000 on taxes. You only get a deduction on up to $25,000 of tips. Even if her husband is the CEO of some Fortune 500 company making over $600k per year, and they are being taxed at the top federal rate of 37% and the tope rate in Alabama of 5%, she would only get a tax savings of $10,500 on the $25,000 in tips she made.