GOP Legislators Introduce Bill to Eliminate Federal Taxes on Tips Following Trump’s Endorsement
House Republicans, specifically Rep. Thomas Massie (R-KY) and Matt Gaetz (R-FL), have proposed a new bill aiming to exempt tips from federal income and employment taxes. This initiative, inspired by Donald Trump’s recent advocacy and a similar campaign by former Congressman Ron Paul, is known as the “Tax Free Tips Act.” The legislation seeks to alleviate financial pressure on service industry workers by freeing their tips from taxation, which the lawmakers argue is a regressive measure exacerbated by the ability of digital payments to tax every transaction. This move comes as a response to rising inflation and the increasing cost of living, with the proponents highlighting the importance of allowing service workers to retain more of their earnings.
A pair of House Republicans introduced legislation on Tuesday that would slash federal taxes on tips after former President Donald Trump promoted the idea earlier this month.
The bill, spearheaded by Rep. Thomas Massie (R-KY) and Matt Gaetz (R-FL), would “amend the Internal Revenue Code of 1986 to provide that tips shall not be subject to income or employment taxes.”
It takes inspiration and its name — the “Tax Free Tips Act ” — from a legislative push by Ron Paul, a former congressman and candidate for president, to nix federal taxation on tips.
“Ron Paul had it right and so does Donald Trump,” Massie said in a statement.
“Taxing tips is regressive and goes against American tradition,” Massie added. “But now digital payments allow the government to tax every transaction, even those that historically have not been taxed. With inflation raging, it only makes sense to eliminate the tax on tips and provide relief to working folks.”
Gaetz said he was “proud” to join Massie in co-sponsoring the tax-relief legislation.
“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,” Gaetz said.
Trump said at a campaign stop in Las Vegas earlier in June that if he is re-elected to the White House in November, he wants to change the tax code to exempt tip income from federal taxes.
“Those people that have jobs in restaurants or whatever the job may be, a tipping job, we’re not going after it for taxes anymore, that will be ended,” Trump said.
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A press release from Gaetz’s office noted that Rep. Marjorie Taylor Greene (R-GA) is an original co-sponsor of the legislation.
I absolutely LOVE President Trump’s plan for NO TAX ON TIPS!!
Write it on every receipt you sign! pic.twitter.com/BygpUWAunR
— Marjorie Taylor Greene 🇺🇸 (@mtgreenee) June 15, 2024
Greene posted to X after Trump’s comments about scrapping taxes for tips to say that she “absolutely” loved the plan.
She shared a photo of a receipt that had a message written on it that said,” VOTE TRUMP! No tax on tips!!” and encouraged followers to write the same thing on their own receipts.
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