Usually, the saying “if it ain't broke, don’t fix it” holds, especially when applied to policymaking. But in 2025, when Republicans passed the Working Families Tax Cuts (also known as the One Big Beautiful Bill Act), they included several provisions that bolster new models of work like gig work.
Gig work is increasingly how Americans build financial security and fulfilling lives. Freelancing provides the flexibility to earn income around important priorities that don’t fit neatly into a traditional 9-to-5 job. The freelancing world comprises a panoply of occupations, from seasoned self-employed professionals to rideshare drivers.
Over 70 million people freelanced in 2025, and about half of them are women. Moms raising children can build businesses, students juggling classes can pick up app-based work, and retirees managing health appointments can supplement their incomes. Contrary to those who pan gig work as not a “good” job, a wide majority of independent workers (80 percent) prefer their nontraditional job arrangements over a traditional 9-to-5.
In 2025, while the Left was busy engineering restrictions on freelancing and gig work in states like New Jersey, conservatives and President Donald Trump enacted the Working Families Tax Cuts to fix tax reporting headaches for gig workers created by the Biden administration and reward hard work and good service in the tax code.
No taxes on tips was a popular campaign promise that President Trump delivered on for service-sector, low-wage workers. While we think of bartenders and baristas, gig workers can now deduct up to $25,000 of tipped earnings as well. Six million tipped workers earning up to $150,000 for individuals, and $300,000 for married filers, gain this benefit. Because it is retroactive to the start of 2025, tipped workers who earn enough to pay federal income taxes (about 60 percent of households with tipped workers) won’t have to wait until next year to claim it. This is their income they’re keeping and spending on what matters most to them—paying bills, tackling debt, and building up savings or down payments for a home.
As outlined by the IRS, these workers include app-based food delivery and rideshare drivers, along with dozens of other occupations such as salon workers, personal trainers, musicians and singers, digital content creators, landscapers, and personal care workers.
No tax on tips will undoubtedly benefit women, according to our analysis. They comprise more than 50 percent of the workers in 18 tipped occupations, such as bartenders, food preparation workers, and wait staff, and over 80 percent of hosts in restaurants and coffee shops, manicurists and pedicurists, hairdressers and cosmetologists, and skin care specialists. Many of these workers are not employees, but freelancers.
Tax filing season will be easier for freelancers. The Working Families Tax Cuts repealed the vexing “Venmo Tax,” a paperwork nightmare for casual sellers and gig workers.
It never used to be the government’s business when we sold used baby clothes and old furniture. That changed when former President Joe Biden and his Democrat allies passed the inflationary American Rescue Plan Act. To pay for the trillion dollars in stimulus checks and other spending, Democratic lawmakers lowered the reporting threshold for digital transactions in hopes of capturing unreported income, whether or not that was taxable income.
Previously, taxpayers reported income on Form 1099-K in excess of $20,000 and with 200 or more transactions in a calendar year. The intent was to capture the revenue of larger online businesses. Biden and company lowered that threshold to just $600 with no transaction floor.
This action widened the tax net to capture millions of transactions by regular Americans, especially women: selling pre-owned items on resale websites such as Etsy, eBay, and Poshmark; using CashApp to send birthday gifts to family members, splitting the dinner bill for a girls’ night out, or paying roommates their share of the rent. It also captured payments collected through PayPal and Venmo for small gigs such as teens babysitting their neighbors' kids.
Unsuspecting individuals would have been bombarded with intrusive, burdensome, and confusing paperwork for transactions, possibly triggering audits. People should pay the taxes they owe, but these transactions were nontaxable.
The sheer volume of paperwork from the cascade of forms would have buried the IRS. According to its own projections, the number of 1099-K forms would have swelled from 12.2 million in 2023 to 21 million in 2024 and 33 million in 2025. Consequently, the IRS unilaterally delayed implementation of this threshold each year since it should have been enacted in 2022, 2023, and 2024.
By restoring the original $20,000/200 transaction threshold, millions of taxpayers are saved from a complex, frustrating, and costly tax filing season.
Bigger tax refunds, new tax savings, and an easier filing process await gig workers this year, thanks to the Working Families Tax Cuts. We hope that over time, freelancing will grow even more attractive to Americans whose unique situations need flexible earning opportunities.
Patrice Onwuka is the director of the Center for Economic Opportunity at Independent Women and co-host of WMAL-DC’s O’Connor & Co.