'No Tax On Tips' Includes Digital Creators, Too

'President Trump's One Big Beautiful Bill Act may have quietly changed the economics of the creator economy,' reports the Hollywood Reporter. The Treasury Department has ruled this past week that digital creators, including podcasters, influencers, and streamers, qualify for the U.S. 'no tax on tips' policy, allowing them to deduct tipped income up to $25,000. From the report: The change could cause digital creators to rethink how they seek income. Platforms like TikTok, YouTube, Twitch and Snapchat all offer a variety of ways for creators to generate income, be it a share of advertising revenue or creator funding programs, or options to launch subscription tiers for their channels or profiles. But they also give creators the option to turn on tips or gifts. If revenue from user tips or gifts is eligible, while recurring subscription revenue is not, it could shift how streamers, podcasters or influencers ask their followers to support them.

To be sure, there are limitations: The tax deduction is capped at $25,000 per year, and it begins to phase out at $150,000 in income for single filers and $300,000 for married joint filers. The act also provides that tips do not qualify for the deduction if they are received 'in the course of certain specified trades or businesses -- including the fields of health, performing arts, and athletics,' Treasury says, further limiting the deduction opportunity for some in entertainment-adjacent lines of work.

But by making influencers, Twitch streamers and podcasters eligible, the administration has nonetheless changed the incentive structure for digital creators, and the ramifications could be felt across the creator economy in the name of tax efficiency (Don't be surprised if users are asked to like, subscribe, and tip). Platforms may also develop more ways to more prominently feature tips and gifts, pushing creators to add more opportunities for that income. But the inclusion of digital creators is also a recognition of how the power dynamics have shifted in media.

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