Any changes to the taxation of tipped income would require an act of Congress. When asked for more details on the policy change, one commenter said, “President Trump will ask Congress to eliminate taxes on tipping.” »
Lawmakers will have an opportunity to rewrite the nation’s tax policy in 2025, when the bulk of Trump’s 2017 tax cut package expires. Wage tips were not addressed in the initial legislation, but Congress could include them in any overhaul or extend its attempts next year.
President Biden’s campaign — which has called for raising the minimum wage and eliminating the tipped minimum wage — did not immediately respond to a request for comment on Trump’s proposed tax change.
Under current law, any gratuities workers receive must be taxed at the same rate as their regular income, and many employers report their workers’ tips to the IRS – but much of it is paid in cash and does not is never reported to the IRS. More than 6 million workers had tips reported to the IRS in 2018, the most recent year for which complete IRS data is available.
Trump’s proposal could appeal to the many service workers and Latino voters who help boost Nevada’s economy, particularly its dominant hospitality industry. He has tried to broaden his appeal to Latino voters, who make up about 20% of Nevada’s electorate, arguing that they would benefit more economically from his policies than Biden’s.
Ted Pappageorge, secretary-treasurer of Local 226 of the Culinary Workers Union — which is closely allied with the Biden campaign — noted that the Culinary Union “fought for the rights of tipped workers and against unfair taxation” for decades.
“Relief is sorely needed for those who earn tips, but Nevada workers are smart enough to know the difference between real solutions and the wild campaign promises of a convicted felon,” Pappageorge said in a statement.
Tips are crucial for many of these workers. The federal government and many states allow employers to pay tips to workers well below the regular minimum wage, as long as they make up the difference to ensure that each worker earns at least the standard federal minimum wage of $7.25 Of time.
The IRS considers Cash and non-cash tips as income subject to federal income tax, as well as Social Security and Medicare taxes. In 2018, the latest year for which complete IRS data is available, the average worker who had tips reported on their W-2 had $6,249 in tips that were taxed.
“You are doing an excellent job of serving. You take care of people. “And I think it’s going to be something that’s really deserved,” Trump said at the rally. “So those people who have a restaurant job, whatever the job is, a tipping job that we’re no longer looking for for taxes.”
Mariana Alfaro contributed to this report.