TIP Improvement Act of 2026
Steven Horsford (Democrat) · Sponsor of record · Official record ↗
- What it does
- The bill would end the tip credit under federal wage law, requiring employers to pay tipped workers the full federal minimum wage directly while letting workers keep their tips, and it would tighten penalties so employers that unlawfully use or keep tips owe back the full amount. It would also make the tax deduction for tips permanent, double the deduction cap to $50,000 for married couples filing jointly, count mandatory or suggested automatic gratuities as qualified tips for workers in hospitality, food and beverage service, and cosmetology, and add anti-fraud rules barring the deduction for tips from related parties and for workers who own a stake in the business that employs them. This bill requires repair shops, salons, and other personal service businesses that employ tipped workers to pay them the full federal minimum wage instead of a lower tipped wage, and lets cosmetology workers deduct automatic gratuities from taxes.
- Where it stands
- HR7577 was referred on February 13, 2026 to the Committee on Ways and Means and in addition to the Committee on Education and Workforce, with the period for each referral to be set later by the Speaker. A markup on the bill was held on March 5, 2026 by the House Committee on Energy and Commerce, so the bill has been taken up in committee rather than sitting untouched since referral.