Tax refunds have surged by 11% this year, with over 63 million Americans receiving an average of $3,521 in refunds, according to IRS data. The increase is attributed to provisions in the One Big Beautiful Bill Act, including the "No Tax on Tips" and "No Tax on Overtime" policies. Over 5.5 million Americans have claimed the "No Tax on Tips" deduction, averaging $7,100, while 25 million have claimed "No Tax on Overtime," averaging $3,000.
The IRS and Treasury Department have finalized regulations expanding the no-tax-on-tips provision to over 70 occupations, including bartenders, servers, and water taxi operators. The deduction applies to tips received before December 31, 2024, for single filers earning up to $150,000 and joint filers up to $300,000, with reductions for income above those thresholds.
Business owners and workers have reported positive effects. Raj Aman, a New York bar owner, noted increased hiring interest due to the tax break. Bartender Claire Kerrigan said the policy allows her to spend tips without setting aside money for taxes. Meanwhile, Sergio Esposito, a town councilman, predicted the tax cuts would boost local spending.
The White House highlighted that Americans earning $15,000 to $80,000 receive an average 15% tax cut. The "No Tax on Tips" and "No Tax on Overtime" provisions are part of broader tax relief measures aimed at working families.