The devil is coming out of the details of Trump’s “no taxes on tips” policy, and it turns out tipped employees still have to pay taxes on those tips but then deduct them afterwards, and automatic service charges are still fully taxed.

Donald Trump probably skimmed a few votes from Kamala Harris, particularly in Las Vegas and Nevada, with his campaign pledge of “no taxes on tips.”  And one could say that he followed through on this one, as the “no taxes in tips” policy (and we’re putting it in quotes for a reason) was indeed part of the so-called One Big Beautiful Bill that Congress passed this summer.

And now that the IRS is releasing the rules around “no taxes on tips,” we find that — surprise! — tipped employees are still paying taxes on their tips.

As this post from Moneywise explains, it’s not really “no” taxes. That is, you still pay taxes on these tips, but the tipped employee can deduct up to $25,000 from your taxes on tipped wages. Which means you need to document that amount. Documenting $25,000 worth of tips sounds like a lot of paperwork! (And if you make more than $150,000 per year, you can’t deduct tips anyway.)

And the Bay Area News Group finds another significant loophole. The only taxes you can deduct are on tips that are considered “voluntary” tips, and mandatory tips cannot be deducted. That is to say, flat-percentage service charges the likes of which are now commonplace across the Bay Area, and any mandatory gratuities “for parties of six or more” cannot be deducted, and tipped employees are still paying full taxes on any tips that the establishment requires the customer to pay.

According to the new federal guidelines on deducting tips, the policy only includes tips that are “paid voluntarily without any consequence in the event of nonpayment, must not be the subject of negotiation, and must be determined by the payor.”  Getting even deeper in the weeds, the guidelines further define “voluntary” tips as tips where “(1) the payment must be made free from compulsion, (2) the customer must have the unrestricted right to determine the amount, (3) the payment should not be the subject of negotiation or dictated by employer policy, and (4) generally, the customer has the right to determine who receives the payment.”

(As an interesting aside, the New York Post points out a Cupertino pho restaurant that adds on the mandatory tip charge to “parties of one or more.”)

This is perhaps what we should expect of US Congress, where most elected members are from legacy wealth, and many have never worked a tipped service job in their lives. And we’ll remind you that the “no taxes on tips” policy only lasts through 2028, the final year of Trump’s presidency, and it is not permanent.

Related: California Restaurants Are Trying an Odd Legal Argument to Get Out of the Surcharge Ban [SFist]

Image: Man holding a tablet with tipping screen inside a restaurant (Getty Images)