In an article that ran in National Bus Trader, Matthew W. Daus, Esq., founder and chair of the Windels Marx Transportation Practice Group, unpacked how President Trump’s “One Big Beautiful Bill Act” (OBBBA) will affect the for-hire vehicle, taxi, and bus industries. Signed into law July 4, it introduces two major new deductions:
No Tax on Tips: Drivers in recognized tipped occupations (including taxi, app-hail, limousine, shuttle, and charter bus drivers) may deduct up to $25,000 of qualified tips per year between 2025-28.
No Tax on Overtime: Workers may deduct the “premium” portion of overtime pay, capped at $12,500 for single filers or $25,000 for joint filers, also phasing out above certain income thresholds.
The OBBBA simultaneously phased out federal EV credits after Sept. 30 – a major shift that will particularly impact drivers and companies investing in electric fleets.
While the Treasury’s list provides long-awaited clarity, several issues remain unresolved. The description of “shuttle driver,” for example, is undefined in federal law, creating uncertainty for airport and commuter services. Another concern is the inclusion of “private bus drivers” on the list. A “private motor carrier” does not typically provide for-hire, tipped services, suggesting that the Treasury may have misapplied the term. Similarly, the Treasury grouped tour bus drivers under private and charter service, even though tour operations are neither private nor charter in the technical sense. These definitional ambiguities may leave employers and drivers uncertain about how to classify their work and raise the possibility of inconsistent application or disputes down the line.
New guidance explaining how workers can calculate their 2025 deductions for tips and overtime pay, without needing separate employer reporting, was recently released. Examples for both employees and the self-employed were provided.
Sources: National Bus Trader, Windels-Marx
