No tax on tips and overtime wages pushed for by Iowa House Democrats
DES MOINES, Iowa — As the 91st General Assembly quickly approaches one month left in the 2025 legislative session, Iowa House Democrats held a news conference Monday morning to announce two bills.
The proposals would make tips and overtime wages no longer subject to state taxes.
'We're talking about giving a tax break to people struggling to pay rent, to pay off student loans, to make a name for themselves, to make a life for themselves in Iowa and get ahead,' said State Representative Dave Jacoby, (D) District 86 from Coralville.
House Democrats say that the two bills would impact 39,000 Iowa workers that rely on tips to make ends meet, and often these jobs come with overtime work.
'Iowa Democrats want to make sure that the folks that are working for minimum wage in the service industry don't have to pay taxes on their tips,' said State Representative Eric Gjerde (D), District 74 from Cedar Rapids.
Multiple crews battle large fire at co-op in Otley
Iowa House Republicans had a bill that would end the tax on overtime wages that advanced out of subcommittee earlier in the session, but there has been no movement on it since.
'I know Representative Sexton has a bill that would deal with the overtime tax, but he did mention in our Ways & Means committee the price tag,' said State Representative Sami Scheetz (D), District 78 from Cedar Rapids. 'And it's really interesting to hear Republicans talk about price tags for tax bills, when again, the flat tax is going to cost the state potentially billions of dollars. And any time we're going to talk about a tax break that actually impacts and would help working people that work hour by hour every single day, then we raise the flags and say, hey, the price is too expensive.'
House Democrats hope that these two bills will be considered as the session progresses. Two women who work in the serving industry explained at the news conference how these two bills would impact their day to day.
'When income ultimately depends on the discretion of customers, workers can cling to cash tips during slower points of the year in order to pay for their living expenses,' said Catherine Pollard, a Drake undergraduate student who works as a waitress.
'I work around 70 to 80 hours a week in order to do that. I am very aware of each paycheck I receive and the amount of money that gets taken out. It would benefit many individuals including myself who rely on tips to make ends meet,' said Campbell Stepan, a college graduate who works as a server and bartender.
You can view both of the proposals that would be amendments to other bills below:
Tips-HF94.596
Overtime-HF94.502
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Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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