While most University of South Carolina students spent the Fourth of July watching fireworks, a legislative explosion in Washington effectively ended the era of students overpaying the Internal Revenue Service. On July 4, 2025, the “One Big Beautiful Bill” introduced by Rep. Jodey Arrington was signed into law by President Trump, rewriting the rules of the American tax system. This bill carried a simple message for every working Gamecock: it is time to stop giving away your hard-earned money.
As an accounting student and an IRS-certified Volunteer Income Tax Assistance, or VITA, volunteer, I spend some time keeping up with the tax code that many would find unstimulating, to say the least. However, the bill is not just another dry piece of legislation. It is a fundamental change in how the federal government views the financial life of a college student. From the bars in Five Points to Uber drivers across Columbia, South Carolina, aggressive reform has arrived with benefits that every Gamecock needs to understand.
The most immediate way to minimize your federal tax liability is the headline “no tax on tips” provision from the bill that many of us have seen and heard online. For thousands of USC students who pay their way through school by serving or bartending, this is good news. But what does this really mean? Starting this year, the law allows up to a $25,000 deduction in qualified earned tips from adjusted gross income, or AGI.
This deduction also includes gig workers, such as Uber and DoorDash drivers, who provide tip services. If you are a driver, your tips are now deductible up to the same limit. This acknowledges that for the modern student job, “service work” can happen behind a steering wheel.
Furthermore, the bill introduced a $12,500 deduction for "qualified overtime" pay if you are a single filer. For students working hourly summer jobs or paid internships to save for tuition, they can now deduct the “premium” portion of their time-and-a-half pay from federal income. It is important to note that while these deductions apply only to federal income tax, they do not reduce payroll taxes under the Federal Insurance Contributions Act, which fund Social Security and Medicare, but they can still represent a massive increase in take-home pay.
While the federal government is focused on specific wage deduction, the Palmetto State is taking a different approach. South Carolina is currently taking a “wait-and-see" approach to address "One Big Beautiful Bill" deductions. For state income tax, it is continuing to tax overtime and tips, but it could move towards a change in the 2026 sessions.
However, there is good news in store for the state. As of January 2026, South Carolina has officially advanced its plan to phase out the individual state income tax entirely under the current leadership of Chairman of the Ways and Means Committee Bruce Bannister and Gov. McMaster.
Under House Bill 4216, South Carolina has planned to transition to a simplified model that targets a 3.99% flat rate as it steps towards zero. For students starting their respective careers in Columbia upon graduation, this track could make South Carolina one of the most competitive tax environments alongside Florida and Texas. By the time today’s freshmen and sophomores enter the workforce, we could be looking at state income tax being a thing of the past.
These federal and state shifts have created a very unique opportunity for student taxpayers. The "One Big Beautiful Bill" has increased the federal standard deduction to $15,750 for single filers in 2025, and it is set to increase to $16,100 in 2026.
You may be asking, what does this all mean for the average Gamecock? If you work a part-time job or drive for a delivery app and earn less than $16,000, your federal income tax liability is effectively zero. When you layer on the “no tax on tips” deduction for drivers and servers, most working students could walk away this year not paying a single cent to the state or federal government. In fact, when you file your taxes this spring, you may be able to get a full refund on your federal income tax withheld in 2025.
So, what should you do as a student? Do not wait until April 15 to get all your forms together. If you are a tipped worker or a gig driver, ensure your tipped income is correctly identifiable on your W-2 or 1099 forms to take the deduction. If you are an athlete signing NIL deals, make sure to keep records of business expenses, including marketing costs and agent fees, to deduct as an independent contractor.
Tax literacy is more than just a skill for accountants; it is the only way to ensure you aren't overpaying for your own hard work. The "One Big Beautiful Bill" and South Carolina’s move to zero income tax are consequential developments that will define our financial futures. While Washington is determining our future, we owe it to ourselves to understand the real outcomes.
If you feel overwhelmed, remember you are not alone in feeling that way. The tax code can be incredibly complicated. IRS online resources and VITA programs exist to help students navigate the rules. For taxpayers with AGI equal to or less than $89,000, the IRS has chosen to partner with tax software companies that allow you to file a federal return for free. The law has officially changed in our favor, and it is time for Gamecocks to stop "donating" to Uncle Sam and start taking advantage of the benefits we’ve earned.
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