"The deduction is capped at $25,000 for any single filers making up to $150,000 per year, which is great news for anyone who says "like and subscribe" for a living: Most creators earn below the $150,000 mark, per the Creative Class Group. A 2024 study from the Creative Class Group showed that more than a quarter of US-based influencers with at least 100,000 followers reported earning tips."
"Digital creators reported a 40% increase in tips in 2024 over the previous year, according to a report from eMarketer. Defining moment: Creators typically make money through subscriptions or advertising deals, although many platforms like TikTok, Twitch, and YouTube, also offer tipping options. The new law may lead creators to rethink how they ask fans to support them, since tips are eligible for the deduction and subscription revenue is not."
Digital creators become eligible for a tip exclusion modeled on existing provisions for bartenders and servers. The deduction is capped at $25,000 for single filers with annual income up to $150,000. Many creators fall below that threshold, and surveys indicate a growing share of influencers receive tips; reports show a sharp increase in tip revenue in 2024. Platforms such as TikTok, Twitch, and YouTube offer tipping alongside subscriptions and advertising. Because tips, not subscription revenue, qualify for the deduction, creators may shift monetization strategies. Treasury guidance may exclude tips tied to illegal activity, prostitution, or pornography.
Read at Morning Brew
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