Experts debate ‘no tax on tips' bill's impact in WNY

Yahoo

22-05-2025

BUFFALO, N.Y. (WIVB) — The bipartisan 'no tax on tips' bill recently cleared the U.S. Senate with strong support, promising to eliminate federal income taxes on tipped earnings for qualifying workers.
As the legislation heads to the House of Representatives, local experts are raising questions about how much the change will actually benefit workers in regions like Western New York.
WIVB News 4 spoke with Fred Floss, an economics professor at the University at Buffalo, who said that while the bill appears to be a win for service industry employees, its real-world impact may be limited.
'Everybody can vote for it and say we're protecting tipped workers, and that's great,' Floss said. 'But I just would make sure that most tipped workers realize it's not going to have a big impact on their lives.'
The Senate's 'No Tax on Tips Act' would eliminate federal income tax on tips received in cash, by credit card or check. Under the bill, employees earning less than $160,000 annually would be allowed to exclude up to $25,000 in tips from taxable income each year.
Floss pointed out that many tipped workers already pay little to no federal income tax.
'For most tipped workers, they don't have a lot of tips and they don't make a large salary,' he said. 'I don't know what restaurants or resorts have tipped workers making $160,000.'
Floss noted that while workers in upscale establishments, particularly in major markets like New York City, might see a noticeable change in take-home pay, the same cannot be said for many in Buffalo.
'In high-end resorts or very fancy restaurants where tips are significantly higher, it's going to have an impact,' he said. 'But in a place like Western New York, where a lot of the tipped workers are making minimum wage — or actually below minimum wage because tipped workers are allowed to be paid less — they're never going to hit the threshold where they would have paid any income taxes anyway.'
At Resurgence Brewing Company in Buffalo, where many staff members rely on tips, event manager Brigid Taylor expressed a different concern: the long-term financial visibility of untaxed income.
'I've been in the industry basically my whole life,' Taylor said. 'I always thought in my world that the tips would be income, and then later on, when you want to buy a house or a car, you can kind of show your income as proof. I feel like with no tax on tips, it might be a little bit harder for us in the service industry to get those cars and houses and loans and whatnot.'
The bill now awaits consideration in the House of Representatives. If passed and signed into law in its current form, it would go into effect for all taxable years beginning after 2024.
Dillon Morello is a reporter from Pittsburgh who has been part of the News 4 team since September of 2023. See more of his work here and follow him on Twitter.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.