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139 STAT. 170 PUBLIC LAW 119–21—JULY 4, 2025 gross income’ means adjusted gross income increased by any amount excluded from gross income under sec- tion 911, 931, or 933.’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2024. CHAPTER 2—DELIVERING ON PRESIDENTIAL PRIOR- ITIES TO PROVIDE NEW MIDDLE-CLASS TAX RELIEF SEC. 70201. NO TAX ON TIPS. (a) DEDUCTION ALLOWED.—Part VII of subchapter B of chapter 1 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section: ‘‘SEC. 224. QUALIFIED TIPS. ‘‘(a) IN GENERAL.—There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the individual pursuant to section 6041(d)(3), 6041A(e)(3), 6050W(f)(2), or 6051(a)(18), or reported by the taxpayer on Form 4137 (or suc- cessor). ‘‘(b) LIMITATION.— ‘‘(1) IN GENERAL.—The amount allowed as a deduction under this section for any taxable year shall not exceed $25,000. ‘‘(2) LIMITATION BASED ON ADJUSTED GROSS INCOME.— ‘‘(A) IN GENERAL.—The amount allowable as a deduc- tion under subsection (a) (after application of paragraph (1)) shall be reduced (but not below zero) by $100 for each $1,000 by which the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return). ‘‘(B) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this paragraph, the term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933. ‘‘(c) TIPS RECEIVED IN COURSE OF TRADE OR BUSINESS.—In the case of qualified tips received by an individual during any taxable year in the course of a trade or business (other than the trade or business of performing services as an employee) of such individual, such qualified tips shall be taken into account under subsection (a) only to the extent that the gross income for the taxpayer from such trade or business for such taxable year (including such qualified tips) exceeds the sum of the deductions (other than the deduction allowed under this section) allocable to the trade or business in which such qualified tips are received by the individual for such taxable year. ‘‘(d) QUALIFIED TIPS.—For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘qualified tips’ means cash tips received by an individual in an occupation which custom- arily and regularly received tips on or before December 31, 2024, as provided by the Secretary. ‘‘(2) EXCLUSIONS.—Such term shall not include any amount received by an individual unless— ‘‘(A) such amount is paid voluntarily without any con- sequence in the event of nonpayment, is not the subject of negotiation, and is determined by the payor, Definitions. Definition. 26 USC 224. 26 USC 164 note.