No Tax on Tips: What Moving Company Owners Need to Know

"No tax on tips" has been a hot topic lately. It's in the Big Beautiful Bill that President Trump implemented in 2025, and as a moving company owner, there are certain things that will impact you and your employees. So here's what you need to know:

Is Used Household Goods Moving included in this bill?

Yes, movers are included in this bill. It was officially confirmed in the list as of early October, so as a moving company owner, this does affect you and your employees.

Does this apply to state and local taxes, or just federal?

This one is big. No tax on tips is only applicable for federal income tax. It's not applicable to FICA (which is Social Security and Medicare), and it's not applicable to any state and local taxes. So this is only specifically applicable on federal income tax.

When does this take effect?

All of the tips starting January 1st of 2025 going through the end of the year are going to be applicable for 2025. And this bill continues through 2028 (with an option to extend after that). So we'll see what happens, but for now, know that this applies to all tips starting January 1, 2025.

How should we specify tips vs. regular payroll for employees?

This is what's most important for you moving company owners. For your employees and your contractors, you have to separate out regular payroll and the tip earnings on their payroll, on their W-2s. Because this tax deduction is specifically on the back end, nothing changes on the front end—It's only on the back end. So you do everything like you normally do on the front end. When they go to file their taxes, now they can take a deduction on that federal income tax on the tips that they earn throughout the year. But you have to make sure as the moving company owner that you're specifying what those tips are compared to the total wages.

Here's an example of what this might look like: You have a driver or a crew member that's earning $20 an hour. On average, if you work 40 hours a week for 52 weeks in a year, you're working for 2,080 hours. Now let's assume they take two weeks of vacation, so they actually work 2,000 hours for the year. That's a base of $40,000.

Let's also assume that they earn tips in the amount of 10% of their total wages. So in total, $4,000. In the end, their total taxable income is $44,000.

Now let's assume that they're in the 12% tax bracket. Historically, in the 12% tax bracket, you'd be taxed 12% on all $44,000.

How it will be now going forward under the Big Beautiful Bill—this $4,000 of taxable tips at a 12% tax bracket is actually saving you $480 for the year. That's a nice little refund of your taxes. In the 22% tax bracket, if you're earning $4,000 of taxable tips at the 22% tax bracket, you're actually saving $880 in the year. So it definitely is a nice little bonus for your movers at the end of the year.

And, as the owner, this allows you to recommend the benefit of earning more tips. Employees are more incentivized to have good customer service and, hopefully, getting more tips.

So, to reiterate, it is important for you as the moving company owner on the front end to make sure that you're separating out the regular earnings versus the tip earnings or else your employees are not going to be able to take that deduction on the back end when they go to file their taxes.