Latest news with #TIPSAct
Yahoo
24-02-2025
- Business
- Yahoo
Why Trump's ‘no tax on tips' promise may be closer to reality
(NewsNation) — Eliminating taxes on the tips employees receive on the job was a campaign promise President Donald Trump touted in cities like Las Vegas, and thanks to multiple, potential pathways it may be closer to becoming a reality under his administration. There is cautious optimism on the part of Rep. Vern Buchanan, R-Fla., that no tax on tips will become law as part of the federal budget reconciliation currently being negotiated. If it doesn't make the cut, there is still hope for an issue that has led to unexpected political bedfellows and two bills in the House that could address the topic. Musk doubles down on email ultimatum after agencies push back Buchanan has sponsored the 'No Tax on Tips Act,' and Rep. Steven Horsford, D-Nev., has introduced the 'Tipped Income Protection and Support Act.' Versions of both House bills were written after Trump first expressed his support for eliminating the tax on tips in June of 2024. He proposed the concept as he was campaigning for a second presidential term in Nevada, a state in which many service industry workers rely on tips to supplement their income. There is a companion bill in the Senate introduced by Texas Republican Sen. Ted Cruz, also called the No Tax on Tips Act, that essentially mirrors Buchanan's House bill. Nevada's Sens. Jacky Rosen and Catherine Cortez Masto are co-sponsors. 'A tip is a gift — it's not a guarantee. It's not something that service employees can bank on. And it's not something that should be taxed,' Horsford said at a recent news conference. Since servers are dependent on customers' generosity, he said people who survive on tips are truly just surviving. Both House bills call for an end to taxes on tips and similarly define a tipped worker as someone who works in hospitality, such as serving food or drinks, or cosmetology, such as providing hair care, nail care and spa treatments. Musk, DOGE facing criticism for White House influence Horsford said the bill aims to proactively close a potential loophole that could have led wealthy Americans to give money to family members tax-free by claiming it as a tip. There are some key differences between the two bills. Horsford's TIPS Act would not only eliminate the federal tax on tips, but it would also eliminate the federal subminimum wage of $2.13 an hour for service-industry employees who are expected to supplement their income with tips. In 2024, Nevada eliminated its two-tiered hourly wage; the minimum wage for all workers, including tipped workers, is now $12 an hour. However, subminimum wages still exist in other states. Buchanan's bill exempts taxes on tips up to $25,000, while Horsford's bill does not have a cap. Both bills have exclusions for high-earning employees. But, under Buchanan's bill, a tipped employee would have to pay taxes if they made more than $160,000 in 2025, whereas with Horsford's bill, anyone making more than $112,000 would have to pay taxes. Despite his own bill, Horsford said he is co-sponsoring Buchanan's legislation because it provides another 'opportunity for us to eliminate the income tax requirement for most tipped workers and ensure that bad actors can't use it in inappropriate ways.' It also has a better chance of passing in a Republican-led House. Buchanan told NewsNation he is 'very encouraged by the positive feedback we've received so far regarding my No Tax on Tips bill from everyday Floridians and folks throughout the country who rely on tipped wages to help ends meet.' He believes the passage of the bill would help millions of Americans, no matter what state they are in. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
24-02-2025
- Business
- Yahoo
No taxes on tips closer to reality with multiple pathways
(NewsNation) — Eliminating taxes on the tips employees receive on the job was a campaign promise President Donald Trump touted in cities like Las Vegas, and it's closer to becoming a reality under his administration. There is cautious optimism on the part of Rep. Vern Buchanan, R-Fla., that no tax on tips will become law as part of the federal budget reconciliation currently being negotiated. If it doesn't make the cut, there is still hope for an issue that has led to unexpected political bedfellows and two bills in the House that could address the topic. Musk doubles down on email ultimatum after agencies push back Buchanan has sponsored the No Tax on Tips Act, and Rep. Steven Horsford, D-Nev., has introduced the Tipped Income Protection and Support Act. Versions of both House bills were written after Trump first expressed his support for eliminating the tax on tips in June of 2024. He proposed the concept as he was campaigning for a second presidential term in Nevada, a state in which many service industry workers rely on tips to supplement their income. There is a companion bill in the Senate introduced by Texas Republican Sen. Ted Cruz, also called the No Tax on Tips Act, that essentially mirrors Buchanan's House bill. Nevada's Sens. Jacky Rosen and Catherine Cortez Masto are co-sponsors. 'A tip is a gift — it's not a guarantee. It's not something that service employees can bank on. And it's not something that should be taxed,' Horsford said at a recent news conference. Since servers are dependent on customers' generosity, he said people who survive on tips are truly just surviving. Both House bills call for an end to taxes on tips and similarly define a tipped worker as someone who works in hospitality, such as serving food or drinks, or cosmetology, such as providing hair care, nail care and spa treatments. Musk, DOGE facing criticism for White House influence Horsford said the bill aims to proactively close a potential loophole that could have led wealthy Americans to give money to family members tax-free by claiming it as a tip. There are some key differences between the two bills. Horsford's TIPS Act would not only eliminate the federal tax on tips, but it would also eliminate the federal subminimum wage of $2.13 an hour for service-industry employees who are expected to supplement their income with tips. In 2024, Nevada eliminated its two-tiered hourly wage; the minimum wage for all workers, including tipped workers, is now $12 an hour. However, subminimum wages still exist in other states. Buchanan's bill exempts taxes on tips up to $25,000, while Horsford's bill does not have a cap. Both bills have exclusions for high-earning employees. But, under Buchanan's bill, a tipped employee would have to pay taxes if they made more than $160,000 in 2025, whereas with Horsford's bill, anyone making more than $112,000 would have to pay taxes. Despite his own bill, Horsford said he is co-sponsoring Buchanan's legislation because it provides another 'opportunity for us to eliminate the income tax requirement for most tipped workers and ensure that bad actors can't use it in inappropriate ways.' It also has a better chance of passing in a Republican-led House. Buchanan told NewsNation he is 'very encouraged by the positive feedback we've received so far regarding my no tax on tips bill from everyday Floridians and folks throughout the country who rely on tipped wages to help ends meet.' He said the passage of the bill would help millions of Americans, no matter what state they are in. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
29-01-2025
- Business
- Yahoo
President Trump continues push for ‘no tax on tips'
WASHINGTON (NEXSTAR) — While President Donald Trump continues to call for an end to federal taxes on tips, lawmakers from both sides of the aisle are trying to put that into action. Especially Congress members from Nevada, which has the nation's highest concentration of tipped workers. 'I support no tax on tips, but I think it has to be done in a fair way,' Rep. Dina Titus (D-Nev.) said. Congresswoman Dina Titus says it should come with a minimum wage raise. She's cosponsoring the 'TIPS Act' to do that. 'You've got to be sure that employers don't shift the burden just to tips for income,' Titus said. But some tax policy analysts say that shift could be an unintended consequence. 'Could be that…you do see suddenly a big adoption of tips in a bunch of new industries,' Tax Foundation Senior Tax Policy Analyst Alex Muresianu said. Muresianu says tipped workers make up less than 5% of the labor force, and an even smaller portion earn enough to owe taxes. 'A substantial chunk of tipped workers would not see a benefit from the policy,' Muresianu said. Sen. Catherine Cortez Masto (D-Nev.) says tax relief for those in the service industry is worth pursuing. 'That's my family. Working in that industry, my father worked in that industry. If there's a way that we can help them keep more money in their pockets, I'm always going to fight to figure out how to make that happen,' Cortez Masto said. Cortez Masto is cosponsoring a bipartisan bill but she says other policies, like the Child Tax Credit, need to be part of the picture. 'It should be a comprehensive approach and that's what I'm looking for,' Cortez Masto said. The policy is estimated to cost about $110 billion over a decade. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
