Treasury’s No-Tax-on-Tips Proposal Excludes ‘Illegal Activity’

The Treasury Department on Friday released its proposal regarding tax relief on tips, one of Donald Trump’s key promises in the 2024 campaign, including new prohibitions against money collected in connection with “illegal activity, prostitution services, or pornographic activity.”

The tips provision has been central to Republican efforts to pitch the president’s $3.4 trillion tax legislation — which polls have found to be unpopular — as a gift to the American working class.

The tax cut will increase take-home pay for tipped workers by $1,300 on average, according to US Treasury estimates. The department expects to receive upwards of ...