Trump Proposes Tax Change for Tipped Workers

( – Former President Donald Trump proposed a tax change for tipped workers during his June 9 rally in Las Vegas, Nevada.

If re-elected, Trump said one of the first things he would do is change the tax code and put an end to tips earned by restaurant and hospitality workers being considered taxable income.

He stated that tipped workers “do a great job of service, you take care of people.” He added that while changing the tax code for tips might not be popular, “it’s right for the country” and is “something that is deserved.”

Changes to the tax code, which currently views tips as regular taxable income, require congressional approval. However, in 2025, Congress will review the country’s tax policy as Trump’s 2017 Tax Cuts and Jobs Cut Act (TCJA) expires. While that tax policy did not affect tips, it cut the individual tax rates depending on the tax credit and the corporate tax rate.

Trump again mentioned his idea of changing the tax code regarding tips in a post on Truth Social. He stated President Joe Biden’s tax policy involves “trying to TAX more and more of their Tips,” adding that the Biden administration has hired “88,000 IRS Agents to collect!” He called on Union members, leaders, workers, and non-union workers to support him.

In contrast to Trump, Biden called for tax increases for big businesses and wealthy individuals worth more than $100 million in his March tax proposal. He also suggested the corporate tax rate should be increased closer to the pre-Trump level. For tipped workers, Biden proposed phasing out the tipped minimum wage and raising the federal minimum wage.

According to data from the Internal Revenue Service, in tax year 2018, employers reported workers received over $38 billion in tips. However, the IRS notes it struggles to get workers and employers to accurately report that income, and in 2023, the IRS launched a new program to encourage workers and employers to comply with tip reporting requirements voluntarily.

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