This is how much tipped workers could save if Congress eliminates taxes on tips

One of President Donald Trump’s main tax proposals on the campaign trail centered on eliminating taxes on tips, and the GOP bill introduced in the House of Representatives would do just that.

According to the text of the bill, this exemption would apply only to certain professions where tips have been “historically” received, such as waiters, bartenders, and hotel workers. However, this would not be a permanent measure, but rather a temporary tax deduction until 2028. Furthermore, the United States Department of the Treasury would have the final say on which occupations qualify.

How much could tipped workers save?

While the Treasury Department will determine which occupations will be included in the tip exemption, the proposal also limits eligibility based on income. In the most recent version of the bill, only those earning less than $160,000 a year would be considered.

The Bureau of Labor Statistics reported that the average income of a waiter or waitress in 2023 was $36,530, with workers in the 90th percentile earning $60,100—a total well below the cutoff currently being considered.

According to estimates from the Tax Policy Center, on average, tip-exempt recipients could see savings of $1,800 a year, while those with lower wages would see savings of approximately $200 a year. However, the exact amount will depend entirely on the worker’s income.

Criticisms of the proposal

While the proposal has received a positive response from professionals who could benefit, it has also sparked criticism, even among Republicans themselves, as some claim that the impact of the measure would be “limited” and prefer to focus on cuts to the government.

According to Joseph Rosenberg of the Urban-Brookings Tax Policy Center, “a relatively small number of workers will see significant tax savings,” and nearly 40% of tipped workers do not earn enough to benefit from the measure. For now, the proposal is blocked by House conservatives, so we’ll have to wait for a new voting date to be determined in Congress.

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