Relief for Service Industry Workers? Gaetz and Massie Propose Tax Free Tips Act

Representatives Matt Gaetz (R-FL) and Thomas Massie (R-KY) have introduced legislation that would provide financial relief to service industry workers by eliminating federal income and employment taxes on tips. The Tax Free Tips Act was cosponsored by Rep. Marjorie Taylor Greene (R-GA).

Gaetz and Massie revealed the bill on Tuesday after Donald Trump made the case for eliminating taxes on tips during a rally in Las Vegas earlier this month.

Breitbart reported that Trump called for the change saying, “So, this is the first time I’ve said this. And, for those hotel workers and people that 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.”

Gaetz noted that as the cost of living continues to rise, those within the service industry are among the hardest hit.

According to Breitbart, the IRS requires requires workers to report their tips to their employers if their tip exceeds $20.

BREAKING: Today, @RepThomasMassie and I introduced legislation to eliminate federal taxes on tips for service-industry workers following President Trump announcing this as one of his top legislative priorities.

As the cost of living continues to rise, the hardworking men and… pic.twitter.com/oERoApbNif

— Rep. Matt Gaetz (@RepMattGaetz) June 18, 2024

Massie explained his support for the measure, pointing out that former Rep. Ron Paul (R-TX) who first introduced the legislation in 2011, had it right–as does Donald Trump.

Massie stated, “Taxing tips is regressive and goes against American tradition. 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.”

Under the proposed bill, tips would be treated as “property transferred by gift” rather than as wages and would be exempted from withholding, Social Security and Unemployment taxes.

Senator Kevin Cramer (R-ND) was also supportive, saying the Tax Free Tips Act could prove to be a boon for the GOP. Cramer stated, “The tips issue is good for Trump and Republicans. Working-class voters have not been this pro-Republican since Reagan.”