The Working for Tips Tax Relief Act of 2025

H.R. 6295 was introduced by Rep. Donald Davis (D-NC-1) on November 25, 2025, and referred to the House Committee on Ways and Means. The bill proposes to permanently exclude up to $35,000 of reported tips from gross income for eligible service workers, with a phase-out for single filers with AGI between $50,000 and $75,000 ($100,000-$150,000 for joint filers). The bill is at the earliest possible legislative stage—introduction and referral—with zero committee hearings, markup, or floor action in the five months since introduction. Its sponsor is a relatively junior Democratic member (first elected 2022), and the bill has no co-sponsors listed. Passage probability in the 119th Congress is negligible without significant bipartisan co-sponsorship and leadership support.

The bill contains no direct government spending or revenue allocation—it is a tax expenditure (forgone revenue estimated at roughly $10-20 billion annually based on tip-income data from the IRS Statistics of Income). Because it is not an appropriations measure, no actual funds are committed. If enacted, the mechanism works through the tax code: workers receiving tips would deduct qualified tip income from their gross income on Form 1040, up to $35,000, with the benefit phasing out at higher income levels.

The structural winners are companies with high proportions of tipped workers where labor availability and turnover are binding constraints on growth. Starbucks ($SBUX) is the clearest beneficiary: its barista workforce relies heavily on tips (including digital tips through the app), and turnover costs are substantial. Domino's ($DPZ) similarly depends on delivery driver availability. McDonald's ($MCD) and Yum! Brands have more diluted exposure due to franchise models and lower average tip dependency per worker (many fast-food roles are minimum-wage or near minimum-wage with less tipping). Chipotle has the least exposure because its crew roles generate lower average tip income per worker.

Current market data reveals no correlation with this bill's progress. Starbucks ($SBUX) at $105.61 has surged 17.88% in 30 days, a move driven by its own operational turnaround and new CEO Brian Niccol's initiatives, not a bill that hasn't moved since November. Domino's ($DPZ) at $337.27 is down 6% in 30 days and 8.31% in 7 days, reflecting broader market rotation out of growth-at-any-price names. McDonald's ($MCD) at $293.17 is down 5.67% in 30 days and 2.07% in 7 days, near the bottom of its 52-week range. These price actions are consistent with company-specific and macro factors, not legislative catalysts.

The legislative path forward requires: (1) Ways and Means Committee consideration and markup, (2) House floor vote, (3) Senate Finance Committee consideration, (4) Senate floor vote, (5) conference committee, and (6) presidential signature. Given the current Congress is at its midpoint (the 119th runs January 2025 through January 2027), a tax bill of this nature would require substantial bipartisan buy-in and likely needs to be attached to a larger must-pass tax extenders package. The bill's expiration date of December 31, 2028 (taxable years beginning after 2025 and expiring after 2028) means even if passed, the benefit is temporary without reauthorization.

Conclusion: No actionable market signal. The bill is a legitimate policy idea with real structural benefits for tipped-worker employers if enacted, but it is at an early legislative stage with no momentum. Tickers like SBUX and DPZ have been moving on completely unrelated factors. Do not trade this bill unless it sees material committee action.