Trump Wants to Fulfill His ‘No Tax On Tips’ Promise. The Details Get Tricky.

Several of the proposals that House Republicans have outlined in their expansive tax bill have drawn concern from the public and within the party itself. But one tax cut provision within the House majority’s plan is receiving an unusual level of public, bipartisan approval — a rule to eliminate federal income taxes on tips.

“No Tax on Tips,” which was one of President Trump’s most buzzy, populist campaign pledges in 2024, polls quite well. An Ipsos survey found roughly three in four Republicans, Democrats and independents were in support. The proposal, which would reduce federal revenues about $11 billion a year, currently appears likely to end up in whatever final bill moves through Congress and heads to the president’s desk to be signed into law.

Tipped workers in the bottom 60 percent of the income distribution would receive an average tax cut of $1,260 if tips were excluded from income taxes. A broad chunk of restaurant workers and bartenders and a large share of hotel staff, barbers, salon workers, tour guides and delivery and Uber drivers are among those who most likely stand to benefit.

The policy push has created odd bedfellows. The National Restaurant Association, the powerful trade group that often lobbies against minimum wage increases for workers, has been supportive of the policy for tipped workers, who are subject to a lower minimum wage than others in the vast majority of the United States.

Yet a unique mix of labor economists, budget hawks aligned with liberals and conservatives, and even some restaurant interest groups have come out against the No Tax on Tips idea.

“The Fair Labor Standards Act specifies that you can only receive tips if you are customer facing, so that means cooks, dishwashers, porters and bussers, in some cases, are all not receiving tips,” said Erika Polmar, the executive director of the Independent Restaurant Coalition, a group that represents the small and midsize market.