Proposed tax cut on tips could increase server income
LEXINGTON, Ky. (ABC 36 NEWS NOW) — In President Donald Trump’s ‘One Big Beautiful Bill,’ he proposes a cut on taxes for qualified tips. On Friday, the bill did not make it out of committee, because several conservative Republicans joined all Democrats in voting against it.
The failed vote, 16-21, stalls, for now, House Speaker Mike Johnson’s push to have the package approved next week. But the holdout lawmakers vowed to stay all weekend to negotiate changes as the Republican president is returning to Washington from the Middle East.
President and CEO of the Kentucky Restaurant Association Stacy Roof says Kentucky is known for its great restaurants, food and drinks. She says this bill would help those in the service industry.
“I think it’s very positive for employees, I don’t think it’s negative for employers,” she said.
She adds that the main issue around tips is getting servers to claim them.
“Fast forward thirty years, you’re going to want the benefits of paying into those systems and having those taxes and the FICA taxes that we all pay,” Roof said.
Dale Morgan, President and CEO of Foundation47 says while the net income of servers would increase, the federal tax revenue for the government would decrease.
“Social security and Medicare are also funded through these taxes,” Morgan said.
Both Morgan and Roof say it’s going to be a waiting game to see how and if these tax cuts could affect people.
If the cuts do happen, Morgan says we might see a rise in employee applications.
“They won’t be taxed on their tips and they’re going to be taking home more pay,” he said.
Right now the bill is set to head to the House. Legislators say there is still a long way to go before anything is put in place.
AP contributed to this story.
