MCLENNAN COUNTY, Texas (KXXV) — One part of President Donald Trump's 'Big Beautiful Bill' touches on saving tipped workers money. While tipped workers would still pay payroll taxes for Social Security and Medicare, the income tax exemption could significantly increase take-home pay for service industry workers.
- President Trump's "No Tax on Tips" policy could significantly impact tipped workers' take-home pay
- Under Trump's"No Tax on Tips" policy, servers making up to $150,000 individually would not pay income tax on their first $25,000 in tips
- Restaurant servers like Kirsten Washington at George's, who currently makes over $50,000 annually, could receive a substantial tax break that would leave more tip money in their pockets.
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Servers and other tipped workers could see significant financial benefits from President Trump's "No Tax on Tips" policy, potentially saving thousands of dollars annually.
Keristen Washington has been taking food orders for 12 years. At George's restaurant in Waco, she and other servers make $2.25 an hour, but with tips, they earn between $16 to $25 hourly.
"Working at George's, I make a little over $50,000 a year so I actually pay in on taxes," Washington said.
That could change next year under the new policy.
Kyle Citrano, owner of George's Restaurant, recently gathered his employees to explain how the "No Tax on Tips" policy would impact their finances.
"You're talking $2,500 to $3,000 in their pocket a year. That's real life changing money on servers," Citrano said.
According to White House reporter for tax notes, Alexander Rifaat, the deduction applies to individuals who qualify.
The $25,000 deduction is for taxpayers filing single who must not make more than $150,000 a year. For those filing jointly, gross income cannot exceed $300,000.
"You still have to pay payroll taxes on those tips, you're still paying into social security into Medicare, it's not a complete nixing on taxes on tips, it's simply removing that income tax for certain individuals at a certain threshold," Rifaat said.
There are additional stipulations as well, including that the tax break won't apply to tips from large parties.
Despite these limitations, Citrano and his employees believe this could significantly benefit servers nationwide.
"This is a really good thing for me," Washington said. "So I might get like a complete tax break to where I don't have to pay anything in or my amount is very little."
Rifaat says the IRS is expected to release a list of professions who qualify for this tax break around October.
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