In 2024, Donald Trump promised to end federal taxes on tips received by service workers, but has he fulfilled his promise? How realistic was this promise? Is there any hope that it will become a reality during his presidency?
With the flood of political activity, conflicting narratives, and confusion regarding what exactly is happening in our government, it’s understandable to have no idea what is going on, or what legislation is real. We looked into the details and found some solid answers (at least for now).
This post was updated on May 21, 2025 to include the “No Tax on Tips Act” that passed the same day.
Background on the Promise
President Trump.
Because Trump’s first term as president overwhelmingly benefitted the wealthy and resulted in one of the largest wealth transfers from the poor and middle class to the rich, he needed to do something different during the 2024 presidential campaign in order to secure the vote of the working class.
As a result, he made a number of promises including eliminating taxes on tips received by restaurant workers, gig workers, and delivery drivers, eliminating taxes on overtime pay, and eliminating taxes on Social Security. He promised that “we are going to do that right away, first thing in office”.
However, many experts doubted the efficacy of eliminating taxes on tips for a number of reasons.
First, many people under-report the amount of tips they receive, so the savings will be minimal at best.
Second, the tax break favors some service workers more than others, and providing an overall tax break for the working class would be more effective than just targeting tips.
Third, restaurants and other service-industry companies will have more incentive to manipulate the tips they receive to take advantage of their workers.
Fourth, it is a meaningless promise that likely wouldn’t achieve any noticeable savings for workers while giving Trump more room to provide tax cuts for the rich.
Fifth, a huge proportion of the people in the United States who are tipped as part of their work don’t make enough money to pay federal income taxes, so it would have no benefit for them.
Did He Keep His Promise?
President Trump.
A unanimous decision has been reached by the U.S. Senate, a seemingly rare occurrence in today’s political landscape. On May 21, the “No Tax on Tips Act” was successfully passed, after being introduced by Senator Ted Cruz. This comes as good news to tip earners across the country, as the legislation allows workers to deduct up to $25,000 in tips on an annual basis, assuming their total income falls under $160,000 (which is almost certainly the case for the majority of employees relying on tips). Though the bill definitely includes food servers, the Treasury Department must identify other eligible occupations in the next three months. Those in opposition to the bill point out that it may cause employers to lower base wages, which would negatively impact tipped workers. The bill will now be considered by the House of Representatives.
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