Trump Makes Waves with Campaign Promise to “Not Charge Taxes on Tips” to Service Workers

The surprise promise adds another layer to Trump’s legacy of tax cuts.

In a direct appeal to hospitality workers, former President Donald Trump announced plans to eliminate federal income tax collection on tipped wages. “This is the first time I’ve said this, and for those who work at hotels and people that get tips, you’re gonna be very happy because when I get to office we are going to not charge taxes on tips, on people making tips,” Trump said to supporters at a rally in Las Vegas, promising it would be a first-day priority for him in office.

With the suite of tax cuts and reforms he advocated for in 2017 set to expire in 2025, it may be the case he would include the tipping wage exemption in negotiations for an extension of his tax reform proposal.

Word spread quickly among service workers with images on social media of written endorsements of Trump and his plan written on receipts garnering attention. According to the IRS, the average industry worker reports about $6,000 in income from tips. A full exemption of federal income tax from tipped wages could be enough to help cover living expenses for many. 

Competitive Enterprise Institute points out that in recent years, total collected taxes from tips have increased as electronic payments have increased, “the taxman is therefore taking a bigger bit out of the take-home pay of waiters, bartenders, hairdressers, and other service industry workers. The closer monitoring of tipping means regulators are also much more likely to assert control over it.”

As Trump angles to win over swing states in a contentious race, his latest promise may resonate in Nevada, as around 25% of all private sector workers in the state receive tip wages. It also could indicate Trump’s intention to appeal to wider demographics, in particular younger voters. Rep. Ron Paul’s 2012 presidential campaign, notably popular with youth voters, espoused the same policy idea. Whether Trump’s proposal is enough to galvanize support from undecided voters remains yet to be seen, but further appeals to cutting costs and saving money for workers are likely.