Republican Representatives Thomas Massie (KY) and Matt Gaetz (FL) introduced a bill that seeks to exempt tips from federal taxes.
The Tax Free Tips Act will “amend the Internal Revenue Code of 1986 to provide that tips shall not be subject to income or employment taxes.”
Under current law, tips are seen as income and are affected by employment taxes. The bill would remove the section of IRS policy that requires workers to report their monthly tips to their employers if the tips exceed $20.
Gaetz said in a statement, “As the cost of living continues to rise, the hardworking men and women in the service industry, many of whom may be working a second job to make ends meet, must be allowed to keep every dollar of tip money they earn. I am proud to join with Rep. Thomas Massie in co-leading this important tax-relief legislation.”
Massie similarly noted that taxing tips is “regressive and goes against American tradition.”
“But now digital payments allow the government to tax every transaction, even those that historically have not been taxed,” Massie noted. “With inflation raging, it only makes sense to eliminate the tax on tips and provide relief to working folks.”
Rep. Marjorie Taylor Greene (R-GA) co-sponsored the bill.
“President Trump is right, no one should be taxed on the tips they receive for providing a good service,” Greene wrote on social media.
The bill comes as Donald Trump announced during a Las Vegas campaign rally that he plans to abolish taxes on tips.
“This is the first time I’ve said this,” Trump declared, “and for those hotel workers and people that get tips, you’re going to be very happy. When I get back into office, we are going to eliminate taxes on tips. We’re going to do that right away, first thing in office.”
“So those people that have jobs in restaurants, whatever the job may be, a tipping job, we’re not going after for taxes anymore. This will be ended,” he added.
Following the declaration, Americans across the country began writing, “Vote Trump, No Taxes On Tips!” on receipts.
