Many service workers are eagerly awaiting no longer paying taxes on their tips. Yet the fine print in Republicans’ new law could limit savings for some waiters, bartenders and others.

Among the particulars restricting the reach of the measure: Only the first $25,000 in tips are free from income taxes. Tipped workers will still face the 7.65% combined payroll taxes that fund Social Security and Medicare. And workers won’t be able to benefit if federal officials say their type of service job doesn’t qualify.

The cut could save some service workers thousands of dollars a year in federal taxes.

More than a third of tipped workers don’t make enough to pay federal income taxes, including many low-income workers with children and students who work in part-time tipped jobs. They wouldn’t benefit from the no-tax-on-tips deduction.

Under Republicans’ policy, workers who do pay federal income taxes will be able to deduct up to $25,000 for tips. For someone in the 12% tax bracket making that much in tips, the change would deliver up to $3,000 in savings. The deduction would start phasing out once an individual’s income reaches $150,000, or $300,000 on a joint return for people who are married.

The relief will take effect this tax year, including for tips already received.

The law orders the Treasury secretary to publish a list of typical tip-earning jobs that qualify for the deduction, so it is unclear now exactly who will benefit. Tax experts said barbers, restaurant servers and other longtime service workers are almost certain to qualify, but it is unclear whether it will extend to other types of jobs such as online creators, who are sometimes tipped for their work.

Much of this year’s savings would come as a lump-sum part of the tax refunds workers will receive in early 2026. Workers can also change their paycheck withholding now; the law instructs the Internal Revenue Service to update tax withholding tables next year to accommodate the change.

The new law also requires the Social Security numbers of the worker and any spouse, barring workers living in the country illegally and workers married to them from claiming the deduction. Other parts of the legislation, such as changes to Medicaid, nutrition-assistance benefits and other tax cuts, could also affect service workers.

Employers will need time to adjust their payroll systems, said Michael Chittenden, a tax lawyer at Covington & Burling. The businesses might need to communicate with workers about the limits so employees don’t expect tax breaks they aren’t getting, he added.

Some workers reported that their tax forms asked for their income altogether—and said they are concerned that they might have trouble claiming the tax break unless they can clearly report tips separately from wages.

Devin Riley, a concessions worker at Allegiant Stadium in the Las Vegas area, said it reports a combination of his wages and tips, and expects the venue will have to separate the two for him to get the tax break. “It would help me with my place right now, my car, just the daily stuff,” he said.

Espinoza estimated that he usually makes roughly $30,000 in tips annually, and he depends on that money to help cover rent and make car payments. A $25,000 cap on deductions would mean still paying taxes on roughly $5,000 of his tips each year.

“When you hear no tax on tips, you generalize,” he said. “But when we hear specifics, a $25,000 cap is frustrating.”

Under the law, the tip-tax deduction will sunset after 2028. Jeremy Aguero, principal analyst at the Las Vegas economic-research firm Applied Analysis, said he expects the policy to be popular enough on both sides of the aisle that Congress will extend the provision.

Trump Promised ‘No Tax on Tips.’ Then Came the Fine Print.