During a campaign rally in Las Vegas, former President Donald Trump announced his plans to cut federal taxation on tips if he is re-elected to the White House.
Speaking to a packed crowd, Trump stated, “For those hotel workers and people who get tips, you’re going to be very happy because when I get to office, we are going to not charge taxes on tips, people making tips.” He emphasized that this policy change would happen “right away, first thing in office.”
This proposal, one of Trump’s most significant new policy ideas in months, is seen as an attempt to gain more support from blue-collar voters, a demographic that has been shifting towards Republicans in recent years. In contrast, President Joe Biden has proposed increasing taxes on wealthy individuals and corporations by implementing a wealth tax on those worth over $100 million and raising the corporate tax rate.
President Biden has also supported raising the federal minimum wage to $15 an hour and phasing out the tipped minimum wage in restaurants. However, his campaign has not yet commented on Trump’s proposal.
Trump further elaborated on his plan on Truth Social, expressing his hope that union and blue-collar workers will support Republicans over President Biden. The Culinary Union responded cautiously, stating that while relief for tip earners is needed, they can differentiate between real solutions and campaign promises.
Any changes to tax laws regarding tips would require congressional approval. Currently, tips are considered regular income and subject to standard income tax laws.
Key provisions of Trump’s Tax Cuts and Jobs Act of 2017, which included cuts to individual tax rates, are set to expire next year. The fate of individual tax rates beyond 2025 will likely depend on the outcome of the 2024 elections. If Republicans control the House, Senate, and White House, they may seek to reauthorize Trump’s tax plan, potentially including changes to tip taxation.
However, if the government remains divided, reaching an agreement on this contentious issue could prove challenging, even if Trump is re-elected.
