It's a bit of hyperbole, but it's not too far off of the truth. In the past you only paid taxes on tips you claimed, so if you got all your tips in cash you perhaps didn't claim them all (or maybe just enough to hit the minimum wage). If you got tips on credit or debit card then they were automatically counted. Last year they passed a rule that goes through 2028 in which you can deduct up to $25k of tips from your income. You still have to pay payroll taxes on those tips, but come tax time you can deduct up to $25k and get those taxes back. So if you made $60k including tips, maybe $10k of those tips were in cash, you can deduct $25k for tips and then the standard deduction is another $16k and you don't claim the $10k in cash. $60k - $25k - $16k - $10k = $9k in taxable income.