No taxes, no problem?
Georgia and national restaurant industry lobbying groups support the No Tax on Tips Act, but some Atlanta culinary pros have reservations.
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The Hill
08-07-2025
- The Hill
How no taxes on tips could impact you
(NEXSTAR) — Among the multiple provisions within the bill President Donald Trump signed last week are several that could directly impact you, like changes to the child tax credit, a tax deduction for seniors, and no taxes on overtime pay. Another aspect that could put more money in your pocket will depend on where you work — and how you're paid. If you receive tipped wages, up to $25,000 will be tax deductible starting this year and running through 2028. The maximum deduction is available to those who have an income of $150,000 or less, or up to $300,000 for those filing jointly. This also only applies to federal income taxes, which means those who don't make enough to pay federal income taxes won't benefit from the deduction, according to The Wall Street Journal. Additionally, it will only apply to certain professions. The Treasury has to provide a list of those qualifying jobs within three months, WSJ reports. Tips are currently considered taxable. The cap on the amount of tipped wages that are tax deductible was added to the bill by the Senate, and received pushback from some, including Rep. Alexandria Ocasio-Cortez (D-N.Y.). She called the cap a 'scam,' pointing to other cuts in the megabill that could raise taxes for some and strip their SNAP, Medicaid, or insurance. Rep. Lloyd Doggett (D-Texas) shared similar sentiments about the bill passed by the GOP-led Senate, saying, 'These little flourishes that were added, like no tax on tips, are issues that are designed to cover the horrible job that they're doing.' Trump and former Vice President Kamala Harris campaigned on tax-free tips last year, and the Senate passed the 'No Tax on Tips Act' earlier this year, which received bipartisan support. The Finance Committee specified that 'cash tips' qualify but said the term applied to tips paid in cash, charged to credit cards or received from other employees under a tip-sharing arrangement. The National Restaurant Association, a trade organization that represents nearly 500,000 U.S. restaurants and bars, applauded the House's passage of Trump's spending bill — which did not cap the amount of tax deductible tipped wages — and said it wants to see tax-free tips. The association estimates the measure would benefit more than 2 million servers and bartenders. But the U.S. restaurant industry has more than 12 million workers, including dishwashers and chefs, according to government data. The Independent Restaurant Coalition said last month the 'no tax on tips' proposal leaves out too many of those workers. Others have instead called for Congress to take up a separate bill introduced by Nevada Democrat Steven Horsford that would eliminate taxes on tips but also require restaurants to pay workers at least the federal minimum wage of $7.25 per hour. In 43 states, restaurants are currently allowed to pay tipped workers much less, in some cases as little as $2.13 per hour. The Associated Press contributed to this report.
Axios
08-07-2025
- Axios
Trump's "big, beautiful bill" stops short of "no tax on tips" promise
The fine print in President Trump's recently signed"big, beautiful bill" could restrict savings for some tipped workers. Why it matters: Trump made "no taxes on tips" a centerpiece of his presidential campaign — and while a provision in the new law honors that idea on the surface, it doesn't eliminate all taxes. Here's what to know: How does the "big, beautiful bill" impact tipped workers? State of play: A qualifying worker's first $25,000 in tips are exempt from income taxes. Tipped workers will still pay 7.65% in payroll taxes that fund Social Security and Medicare. The law shouts out food service and cosmetics industry workers specifically, stressing that the tax exemption will apply "only to certain lines of business." By the numbers: The tax deduction would decrease once a worker's income hits $150,000 — decreasing further at $300,000. Tipped workers filing a joint return with spouses would also see less of a deduction. The law also requires workers to provide their Social Security numbers — as well as any spouses — making undocumented workers ineligible for the tax break. Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022, per the Institute on Taxation and Economic Policy (ITEP). When does the tax provision go into effect? The law will apply to the current tax year, including tips already accrued. How many tipped workers are there? About four million people in the U.S. earned tips in 2023, according to Yale University's Budget Lab. That's 2.5% of all workers. Two-thirds of restaurant workers who work for tips earn so little that they don't pay federal income taxes, per a 2024 report parsing data from the Census Bureau's American Community Survey. Workers are currently taxed on tips, which puts an added financial strain on a demographic that tends to be lower income. The median weekly wage for tipped occupations in 2023 was $538, versus $1,000 for non-tipped workers, per the Budget Lab. What did Trump promise tipped workers on the campaign trail? "No tax on tips" began as a promise Trump made during a 2024 campaign stop in Nevada. It has since become a top talking point for Republicans as they've promoted their megabill. The intrigue: "No tax on tips" has emerged as a rare bipartisan, populist policy. Former Vice President Kamala Harris adopted the promise as a part of her own presidential campaign two months after Trump did. In May, the Senate passed a separate "No Tax on Tips Act" in a surprise move, which no lawmakers — Republican or Democrat — objected to. Will no taxes on tips help tipped workers?
Business Journals
03-07-2025
- Business Journals
No taxes, no problem?
Preview this article 1 min Georgia and national restaurant industry lobbying groups support the No Tax on Tips Act, but some Atlanta culinary pros have reservations.
