--- title: No Tax on Tips and Overtime - What Bridal Shops Need to Know description: [Add a short description of the blog post here] image: https://blog.bridal.vision/hubfs/No%20tax%20on%20tips%20-%20bridal%20shops.png --- [![BridalVision](https://blog.bridal.vision/hs-fs/hubfs/Logos/BV-PinkLogo(noCV)-1.png?width=490&height=188&name=BV-PinkLogo(noCV)-1.png "BridalVision")](https://bridal.vision) - [Our Approach](https://www.bridal.vision/approach) - [Accounting](https://www.bridal.vision/accounting) - [Advisory](https://www.bridal.vision/bridalvision-financial-advisory-programs-overview) - Education - [Bridal Success Blog](https://blog.bridal.vision) - [Bridal Business Masterclass](https://resource.bridal.vision/bridal-business-masterclass) - [Case Study](https://resource.bridal.vision/case-study-blush-bridal-boutique) - [Text us (401) 227-0889](tel:4012270889) - [LOGIN](https://app.bridal.vision) # No Tax on Tips and Overtime - What Bridal Shops Need to Know ![Image of Ingrid Heilke](https://blog.bridal.vision/hubfs/Headshots%20and%20Team%20Photos/Headshot%20edit%20for%20IG.png) ###### Ingrid Heilke [mailto:?subject=Check%20out%20https://blog.bridal.vision/no-tax-on-tips-and-overtime-what-bridal-shops%20&body=Check%20out%20https://blog.bridal.vision/no-tax-on-tips-and-overtime-what-bridal-shops&media=https://8322818.fs1.hubspotusercontent-na1.net/hubfs/8322818/No%20tax%20on%20tips%20-%20bridal%20shops.png](mailto:?subject=Check%20out%20https://blog.bridal.vision/no-tax-on-tips-and-overtime-what-bridal-shops%20&body=Check%20out%20https://blog.bridal.vision/no-tax-on-tips-and-overtime-what-bridal-shops&media=https://8322818.fs1.hubspotusercontent-na1.net/hubfs/8322818/No%20tax%20on%20tips%20-%20bridal%20shops.png) If your stylists or other employees receive tips, you’re now living in a new tax world. Headlines like “No Tax on Tips!” sound simple. In reality, the rules are more nuanced. Bridal shop owners need to understand what *actually* changed, what stayed the same, and how to support their teams without accidentally slipping out of compliance. [Need Accounting Help? Book a Discovery Call](https://calendly.com/viridian/discovery) ## Key Takeaways - **This is a deduction, not true “zero tax.”** The new law lets eligible workers deduct up to **$25,000 of qualified tips** from federal taxable income (2025–2028), if they meet certain criteria. - **Payroll rules still apply.** You must **keep tracking and reporting tips** and still withhold **Social Security, Medicare, and federal income tax** from wages and reported tips. - **Only certain workers qualify.** The IRS will allow the deduction only for [occupations it lists as “customarily and regularly tipped.”](https://www.irs.gov/forms-pubs/occupations-that-customarily-and-regularly-received-tips-on-or-before-december-31-2024?utm_source=chatgpt.com) Bridal roles may or may not qualify—you need to check. - **Reporting rules are tightening.** Starting with later tax years, employers must **separately report qualified tips** to the IRS; 2025 has some transition relief, but you still need solid records. - **This is a short-term window.** The “No Tax on Tips” deduction currently applies to **tax years 2025–2028**, unless Congress extends or changes it. ## What “No Tax on Tips” Actually Means The phrase is catchy, but a bit misleading. Under the **One, Big, Beautiful Bill Act**, workers in certain tipped occupations can now **deduct up to $25,000 in qualified tips** from their **federal taxable income** for tax years **2025–2028**. A few key points: - The deduction: - Applies to **qualified, voluntary tips** (cash or card, including tip pools), properly reported. - Is available whether the worker itemizes or takes the standard deduction. - **Phases out** for modified AGI above **$150,000 (single)** and **$300,000 (married filing jointly)**. - It does **not**: - Remove **payroll taxes** (Social Security and Medicare). - Automatically change state or local tax rules. - Eliminate your need to **track and report tips** accurately. In plain English: Your team may pay **less federal income tax** on their tips. That does **not** mean tips disappear from payroll or from your responsibilities as an employer. ## Does This Apply to Bridal Shops? This is where it gets a little gray. The law doesn’t say “anyone who gets tips.” It says **occupations that “customarily and regularly” received tips before December 31, 2024**, based on an official list the IRS and Treasury publish. The list includes categories like: - Food and beverage service - Hospitality and guest services - Personal services and appearance (salons, spas, etc.) Bridal stylists and consultants live in a fuzzy middle space: - In some markets, brides tip frequently. - In others, tips are rare or non-existent. - Bridal roles may fall under **personal services / personal appearance**, but "bridal stylist" is not specifically mentioned on the occupation list. It is ultimately up to your employees whether they choose to attempt to take the tip deduction. The IRS may disallow the deduction. Your only responsibility as a business is to report payroll data correctly. Risk arises for you if you give tax advice to your employees or mischaracterize tips. ### What you should do - **Continue treating tips as taxable wages** Report all tips through payroll as you always have. Do not exclude tips from taxable wages or change payroll treatment based on the new deduction. - **Do not position bridal stylists as a “tipped occupation”** Since *bridal stylist* is not specifically listed and tipping is not customarily and regularly established across the industry, avoid labeling the role as qualifying for the deduction. - **Avoid giving tax advice to employees** Do not tell employees whether they *should* or *should not* take the deduction. That determination belongs to the individual taxpayer and their tax advisor. - **Use neutral, factual language if asked** A safe response sounds like: > “The IRS has published a specific list of occupations that qualify. Bridal stylist is not specifically listed. We report tips as taxable income, and employees should consult their tax advisor about personal deductions.” - **Document your position internally** Make sure managers and payroll staff are aligned on how to respond to questions so messaging is consistent and does not unintentionally create risk. --- ## What Stays the Same for You as an Employer Even with this new deduction, your core responsibilities **did not** go away. You still need to: 1. **Collect tip information ** - Even though tips in the bridal industry are typically **collected via credit card**, you still need a process to capture tip amounts for payroll reporting. - Employees are required to report tips totaling **$20 or more in a month**. In practice, when tips are processed through your POS or payment system, this reporting often happens automatically — but the obligation still exists. - All reported tips (including credit-card tips) must be included in the employee’s wage base and treated as **taxable compensation**, subject to applicable payroll taxes. 2. **Withhold and remit taxes** - Federal income tax - Social Security and Medicare - Any applicable **state and local** taxes 3. **Reflect tips on Form W-2** - Report wages + tips correctly. - For 2025, W-2s aren't fully redesigned yet, but tips still show up in standard boxes; the IRS is offering **transition relief** while new reporting rules phase in. Your staff may see a **lower federal income tax bill** when they file if they claim the deduction on their own returns. But the **day-to-day payroll process stays firmly on your plate.**   ## New Reporting and Payroll Considerations The law doesn’t just give workers a deduction—it also changes employer reporting expectations. According to the IRS: - Employers and other payors must file information returns that show: - Total **qualified tips** paid. - The **occupation** of the tip recipient. - The IRS will provide **transition relief for tax year 2025**, but expectations tighten for **2026 and beyond**: - Forms (like W-2) will evolve to separate out tip amounts that could qualify. - Payroll systems will need **clear categories** for tips. ### What this means for your bridal shop You should: - **Talk to your payroll provider now.** Ask: - Can we track **cash and card tips** separately? - Can we tag employees by occupation so reporting is easier later? **Standardize your internal process.** - Decide what data you will be using to report tips on your W2s - Document Everything: Clean, consistent records protect you if the IRS ever asks how you handled tips under the new law.   **How to Communicate This to Your Team**   Your employees will hear “no tax on tips” and think, *sweet, I never pay tax again.* You need to reframe that. Here’s a simple script you can adapt: “There’s a new federal tax rule that lets some workers deduct up to **$25,000 of reported tips** from their taxable income. It **doesn’t** change what we do on payroll—we still have to withhold taxes and report all tips. But if your role qualifies, you may pay **less federal income tax** when you file. Talk to your tax preparer and keep reporting all tips so you don’t lose the deduction.” Key messages: - **Tips still get reported.** - **We still withhold payroll taxes.** - **This deduction is a potential benefit for you, not a change in how we run payroll.** If your bridal stylists do qualify, highlighting this benefit can support **recruiting and retention**. It’s one more way to show you care about their financial wellbeing. ## Action Steps for Bridal Shop Owners To keep this practical, here’s a simple checklist: 1. **Confirm eligibility** - Ask your CPA: *Do our employee roles appear on the IRS “customarily tipped” list for No Tax on Tips?* 2. **Tighten your tip tracking** - Make sure you have a **clear, repeatable process** for employees to report tips. - Confirm your **payroll software** can track and report tips accurately. 3. **Update your payroll settings** - Coordinate with your payroll provider to prepare for **new reporting requirements** in 2025–2026. - Ensure taxes still calculate correctly on wages + tips. 4. **Educate your team** - Explain: - What changed. - What stayed the same. - Why they must still report tips. 5. **Loop in your accountant** - Ask how these rules interact with: - Your existing **payroll processes**. - Any **state-level** rules in your location. - Other new provisions like **No Tax on Overtime**, if your staff regularly works overtime. ## What About “No Tax on Overtime”? Separate from the tip deduction, the law also introduced a **temporary federal income tax exclusion for overtime pay**. A few important clarifications for bridal shops: - **Overtime is still subject to payroll taxes** Social Security, Medicare, and applicable state taxes still apply. The exclusion (if applicable) is for **federal income tax only**. - **This only applies to actual overtime wages** It applies to overtime pay required under the Fair Labor Standards Act (FLSA), generally hours worked over 40 in a workweek for non-exempt employees. Bonuses, commissions, or premiums that are not legally defined as overtime do not qualify. - **Many bridal shops will see limited impact** Bridal stylists often: - Work variable schedules that don’t consistently exceed 40 hours, or - Are paid in ways where “overtime” is rare or minimal - **Eligibility and treatment may depend on IRS implementation** As with tips, the details matter. Payroll systems may or may not automatically distinguish “qualified overtime” for income tax purposes depending on future IRS guidance. ### What You Should Do (Overtime) 1. **Continue paying and tracking overtime correctly** Follow FLSA rules and your existing payroll practices. 2. **Do not change overtime classification or payroll treatment prematurely** Until guidance is finalized and payroll systems clearly support the exclusion, avoid attempting to apply special tax treatment manually. 3. **Avoid advising employees on personal eligibility** As with tips, employees are responsible for how they treat income on their personal returns. 4. **Watch for payroll-provider updates** If and when the exclusion is implemented operationally, it will likely be handled through payroll software updates — not employer interpretation. ### Bottom line “No tax on overtime” sounds sweeping, but in practice it is **narrow, temporary, and limited**. For most bridal shops, the correct approach is **wait, comply, and report accurately**, not restructure payroll.   ## Final Thoughts The “No Tax on Tips” law creates a **real benefit** for some tipped workers—but it does **not** remove your payroll responsibilities as a bridal shop owner. You still need: - Clean systems. - Consistent tracking. - Clear communication. If you handle those pieces well, you position yourself as: - A compliant employer - A supportive leader - And a shop where stylists feel informed and valued If you’re unsure how these rules apply to your specific shop, your next best step is simple: **Sit down with your accountant or payroll specialist and walk through your situation together.** If you’d like help thinking through the bridal-specific side of payroll and taxes, that’s exactly what we do all day. [Need Help? Schedule a Discovery Call](https://calendly.com/viridian/discovery)   --- ![Image of Ingrid Heilke](https://blog.bridal.vision/hubfs/Headshots%20and%20Team%20Photos/Headshot%20edit%20for%20IG.png) ###### Ingrid Heilke When I found the world of bridal stores, I found a community of business owners that were solely dedicated to the beauty and transformation of a moment in other women’s lives, but were sacrificing themselves to make it happen. I found loving people who would go hundreds of thousands of dollars into debt to make a moment in someone else’s life beautiful. Guiding bridal store owners to a financial future that does not ask them to sacrifice themselves, but rather, thanks them for the ways that they touch the lives of others has been deeply rewarding. [Follow me on my website](https://blog.bridal.vision/bridal.vision) [Follow me on Facebook](https://blog.bridal.vision/www.facebook.com/BridalVisionFinancial) [Follow me on LinkedIn](https://www.linkedin.com/in/iheilke/) --- ## Related Posts ### Closing Out 2024: The Top 3 Tasks for Bridal Shop Owners to Tackle Now ![Image of Ingrid Heilke](https://blog.bridal.vision/hubfs/Headshots%20and%20Team%20Photos/Headshot%20edit%20for%20IG.png) ###### Ingrid Heilke [Bridal Accounting](https://blog.bridal.vision/tag/bridal-accounting) [Bridal Shop YE Prep](https://blog.bridal.vision/tag/bridal-shop-ye-prep) Read more ### Are wages increasing for your bridal shop? ![Image of Ingrid Heilke](https://blog.bridal.vision/hubfs/Headshots%20and%20Team%20Photos/Headshot%20edit%20for%20IG.png) ###### Ingrid Heilke [Bridal Store Profit & Growth](https://blog.bridal.vision/tag/bridal-store-profit-growth) [Bridal Shop Payroll](https://blog.bridal.vision/tag/bridal-shop-payroll) Read more [![BVF-Logo-WebsiteFooter](https://blog.bridal.vision/hs-fs/hubfs/BVF-Logo-WebsiteFooter.png?width=220&height=83&name=BVF-Logo-WebsiteFooter.png "BVF-Logo-WebsiteFooter")](https://bridal.vision) 426 Washington Street Providence, RI 02903   [Call Us: (401) 227-0889](tel:4012270889) [Follow us on Instagram](https://www.instagram.com/bridalvisionfinancial/) [Follow us on Facebook](https://www.facebook.com/groups/bridalvision) [Follow us on Pinterest](https://www.pinterest.com/BridalVisionFinancial) [Subscribe to our YouTube channel](https://www.youtube.com/@BridalVisionFinancial) #### Solutions - [Accounting and Advisory Services](https://bridal.vision/services) #### Company - [Testimonials](https://bridal.vision/testimonials) - [Jobs](https://career.bridal.vision) #### EDUCATION - [Bridal Success Blog](https://blog.bridal.vision) - [Profit Accelerator](https://www.bridal.vision/profit-accelerator) - [Bridal Business Masterclass](https://resource.bridal.vision/bridal-business-masterclass) - [Case Study](https://resource.bridal.vision/case-study-blush-bridal-boutique) ### Sign Up For Our Bridal Store Tips Copyright © BridalVision 2023. 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