Meet Jordan: Ride-share Driver and Food Delivery Gig Worker
Jordan works part-time as a delivery person for multiple platforms. In 2025, she earns $55,000 in net income, which includes $8,000 in tips collected across platforms. She also uses her own car, incurring $6,000 in business expenses.
How OBBB Changes Help Jordan
No Tax on Tips Deduction
Under OBBB, Jordan may deduct up to $25,000 in qualified tips from her taxable income (assuming she meets all definitions). That removes part or all of her tip income from income tax calculations. (irs.gov)
Qualified Business Income (QBI) Deduction Becomes Permanent
The OBBB makes the QBI deduction permanent. Jordan can potentially deduct 20% of her net self-employment income after expenses. Tips excluded from tax may also be excluded in determining QBI. (irs.gov)
Tax-Liability Before vs After OBBB
| Description | Pre-OBBB (2024) | After OBBB (2025) |
|---|---|---|
| Net income (w/ tips) | $55,000 | $55,000 |
| Eligible tips excluded | $0 | $8,000 |
| Business expenses | $6,000 | $6,000 |
| Taxable self-employment income | $49,000 | $41,000 |
| Approx. 20% tax on net income (simplified) | ~$9,800 | ~$8,200 |
| Approx. standard deduction impacts etc. | Varies | Varies |
This simplified example highlights that Jordan saves over $1,500 thanks to tip exclusion and benefits more from permanent QBI. The actual saving depends on filing status, deductions, state taxes, and Phase-outs.
Tips for Other Gig Workers
- Track tips carefully: even if platforms group everything together, you’ll need reliable documentation.
- File correctly: report income properly via Form 1099-MISC, 1099-NEC, 1099-K (even if a tip-specific line isn’t available yet).
- Plan for deductions: business expenses (auto, equipment, supplies) reduce net income and impact QBI. Use a home-office deduction if qualify.
- Watch income thresholds: exclusions or deductions phase out if modified AGI exceeds certain levels—stay below these when possible.
Key Takeaways
OBBB has made several meaningful improvements for gig economy workers like Jordan. With tip exclusion, permanent QBI, and restored reporting thresholds for 1099-K, the law provides better cash flow, simplification, and affordability. If you’re a gig worker, understanding these provisions may add hundreds or even thousands to your bottom line.