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M&T Bank Workers and the New No Tax on Tips Rule What You Should Know

Healthcare Provider Update: Healthcare Provider for M&T Bank M&T Bank collaborates with various healthcare providers as part of its employee benefits package. Notably, they offer plans that include coverage through the Health Plan Services, which encompasses options under the Affordable Care Act (ACA). Potential Healthcare Cost Increases in 2026 As M&T Bank employees prepare for 2026, they should be aware of significant healthcare cost increases looming on the horizon. The projected rise in premiums for ACA marketplace plans, particularly in states like New York, could exceed 60%. Additionally, the potential expiration of enhanced federal subsidies may leave approximately 22 million enrollees facing a staggering 75% increase in out-of-pocket costs. With employers like M&T Bank possibly shifting a greater share of healthcare expenses onto employees, it is crucial for individuals to review their benefit options and strategize their healthcare spending as they approach a year of unprecedented financial strain. Click here to learn more

'“M&T Bank employees may benefit from reviewing how the new tip deduction rules fit into their broader household planning, as thoughtful preparation can make a meaningful difference,” – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.

'“M&T Bank employees can use the new tip deduction rules as a reminder to review their overall income strategy and stay informed as guidance evolves,” – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How the new “No Tax on Tips” law works for eligible employees.
Income limits, qualifying occupations, and deduction rules.
How M&T Bank households may evaluate these provisions for planning purposes.

Some Employees May Retain a Greater Share of Their Wages

Eligible employees may deduct up to $25,000 in qualified, voluntary tips from their federal taxable income under a new federal tax rule that took effect on July 4, 2025. ¹ M&T Bank workers in eligible service-related roles may want to stay informed about these changes.

- The deduction applies to tax years 2025 through 2028.

- Income earned as tips is not taxable up to $25,000, however the deduction phass out for joint filers with Modified Adjusted Gross Income (MAGI) above $300,000 and single filers above $150,000. ²

What Does “No Tax on Tips” Mean?

A new provision under the One Big Beautiful Bill Act called “No Tax on Tips” permits eligible employees to deduct as much as $25,000 in voluntary tips from federal taxable income, provided that IRS qualifications are met. Voluntary tips do not include mandatory service charges.

To qualify, an employee must work in a profession the IRS and Treasury Department define as “customarily and regularly receiving tips.” A preliminary list includes roughly 70 job types, including:

- Food and beverage service
- Events and entertainment
- Guest services and hospitality
- Home repair and maintenance services
- Personal services
- Personal well-being and appearance
- Recreation and education
- Delivery and transportation

Health care, sports, and performing arts positions are excluded because these roles are not considered to receive tips regularly.

Did No Tip Tax Pass?

Yes. This provision became law on July 4, 2025 as part of broader federal tax reform, which may interest M&T Bank employees with members in eligible occupations.

How Does No Tip Tax Work?

Employees in qualifying roles may deduct up to $25,000 in voluntary tips from gross income. Key points:

- The deduction phases out for single filers at $150,000 MAGI.
- It begins phasing out for joint filers at $300,000 MAGI.
- It applies whether the taxpayer uses the standard deduction or itemizes.
- It is available from 2025 through 2028.

For example, a restaurant server in the 22% tax bracket who receives $20,000 in qualified voluntary tips may reduce their federal income tax by up to $4,400 if IRS requirements are met. This may be meaningful for households that include M&T Bank employees.

When Does Tipping Become Tax-Free?

The deduction begins with the 2025 tax year, meaning eligible employees can claim it when filing their 2025 federal return in early 2026. This timing may matter for M&T Bank employees managing household tax considerations.

Does This New Law Make Tips Entirely Tax-Free?

Qualified voluntary tips (up to $25,000) may be deducted from federal taxable income if the employee meets the occupation and MAGI rules. However, employees—including those in M&T Bank households—may still owe:

- State income taxes
- Local income taxes
- Social Security and Medicare taxes
- Taxes on tips in excess of $25,000

Is the No Tax on Tips Rule Limited to Cash Tips?

No. Voluntary tips received by cash, credit card, or tip pool may qualify. Required service charges do not. This distinction is important for M&T Bank households with individuals in service-based roles.

How to Make a Deduction Claim

Eligible employees can claim the deduction by referring to IRS instructions:

1. Report all earnings, including tips, on Form 1040, line 1a.

2. Complete Schedule 1-A, for deductions such as qualified tips and overtime.

3. Report total additional deductions on Form 1040, line 13b.

Employees may deduct only the qualified voluntary tips actually received, up to the $25,000 limit. M&T Bank employees should remember that eligible tips must still be properly reported for payroll tax purposes.

More Guidance Is Expected

The IRS and Treasury Department will release additional information. Because each household's situation differs, individuals—including those working at M&T Bank—may want to speak with a qualified tax professional for personalized questions.

What Is No Tax on Overtime?

Another provision within the 2025 law allows eligible employees to deduct qualifying overtime pay from federal taxable income—up to $12,500 for single filers or $25,000 for joint filers. ¹ The MAGI phase-out thresholds are the same as the tip deduction. This rule also covers 2025 through 2028, which may influence planning for M&T Bank households evaluating income timing.

Do You Need Assistance Navigating These New Tax Laws?

The Retirement Group can help M&T Bank employees understand how these deductions may influence their retirement planning approach. You can speak with a representative by calling (800) 900-5867 .

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Sources:

1. Internal Revenue Service. “One, Big, Beautiful Bill Provisions.” IRS , 2025, www.irs.gov/newsroom/one-big-beautiful-bill-provisions .

2. Fidelity Investments. “No Tax on Tips: A New Deduction Explained.” Fidelity Learn , 19 Nov. 2025, www.fidelity.com/learning-center/personal-finance/no-tax-on-tips .

3. Lautz, Andrew. “How Does ‘No Tax on Tips’ Work in the One Big Beautiful Bill?” Bipartisan Policy Center , 30 July 2025, bipartisanpolicy.org/explainer/how-does-no-tax-on-tips-work-in-the-one-big-beautiful-bill. Accessed 8 Dec. 2025.

4. “‘No Tax on Tips’ Explained.” TaxSlayer Support , TaxSlayer, 2025, support.taxslayer.com/hc/en-us/articles/40291875700749--No-Tax-on-Tips-Explained. Accessed 8 Dec. 2025.

5. Mahoney, Michael K., and Stephen Kenney. “New IRS Guidance Pinpoints How Individuals May Take Tax Breaks for Tips and Overtime.” Ogletree Deakins , 21 Nov. 2025, ogletree.com/insights-resources/blog-posts/new-irs-guidance-pinpoints-how-individuals-may-take-tax-breaks-for-tips-and-overtime. Accessed 8 Dec. 2025.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Name of Pension Plan: The specific name of the pension plan for M&T Bank will be identified from the documents. Typically, it is referred to as a defined benefit plan or similar. Years of Service: Check the pension plan documents for the required number of years of service to qualify. Age Qualification: Identify the age at which employees are eligible to begin receiving pension benefits. Pension Formula: Find the formula used to calculate pension benefits. This often includes a combination of years of service and final average salary. Name of 401(k) Plan: The 401(k) plan will have a specific name, often like "M&T Bank 401(k) Plan" or similar. Eligibility: Who Qualifies: Find out who is eligible to participate in the 401(k) plan, such as full-time employees, part-time employees, etc.

Restructuring and Layoffs: M&T Bank announced a series of organizational changes in early 2024, including a restructuring plan that led to a reduction of approximately 5% of its workforce. This decision is part of a broader strategy to streamline operations and improve efficiency amidst a challenging economic climate. The bank cited the need to adapt to evolving market conditions and optimize its operational structure as reasons for the layoffs. Importance: Understanding these changes is crucial due to the current economic uncertainties, investment volatility, and evolving regulatory environment. Stakeholders and employees should pay close attention to these developments as they impact job security and financial stability.

M&T Bank provides stock options and Restricted Stock Units (RSUs) as part of its compensation packages. Stock options typically allow employees to purchase M&T Bank stock at a set price, whereas RSUs grant shares of stock subject to vesting conditions. Eligibility for these benefits usually includes executives, senior managers, and other key employees.

Benefits Overview: M&T Bank provides a comprehensive benefits package that typically includes medical, dental, and vision insurance, as well as a range of other benefits such as wellness programs and employee assistance programs. Healthcare Terms and Acronyms: Common terms include PPO (Preferred Provider Organization), HSA (Health Savings Account), and EAP (Employee Assistance Program).