Earlier this week the senate passed Donald Trump’s bill which removed taxes on tips for service industry workers. While this might sound like good news, one woman on TikTok explained why it’s not actually as helpful to people as the GOP would have you believe.
According to TikToker Nomad Jess (@justjessbea) there is one minor detail in the fine print of the bill which renders this change effectively useless. The tax reduction on tips applies to cash tips only, something which is a rare occurrence in this modern world. Most people nowadays will tip via card or by scanning QR codes. According to Jess that means a majority of the tips people working in the service industry make will still be taxable.
Due to the fact many working in hospitality are criminally underpaid anyways, many don’t even report earnings through tips. In reality this tax break isn’t going to change things for a lot of people.
This isn’t the big win it’s being presented as
On X many agreed that a reduction in tax on tips wouldn’t help, one individual commented “I worked in the service industry nearly all of my adult life. This woman speaks the truth.” Others predicted that people would start paying tips in cash more often now to account for the changes.
On the other hand, some were critical of waiters and waitresses not reporting their earnings, accusing them of committing tax fraud. But let’s not forget, the president himself has also been found guilty of committing tax fraud so you could argue people are just following his example.
Some noticed that Jess might have missed something which changes things slightly. A few people pointed out that the tax changes brought in by the bill actually do apply to card payments. One individual rather smugly wrote, “Wait till you find out what the IRS calls “cash tips”…”
They have a point though. According to an article from thehill.com the bill introduces tax reductions on tips “including those given by credit/debit card or by check.” Again, while this sounds like good news, it’s still not that big of a win for service industry workers.
The savings from tax pale in comparison to the price of Medicaid cuts
The GOP spending bill brought in serious cuts to medicaid which many in hospitality depend on. According to prospect.org, industry workers have explained that the tax reductions won’t be anywhere near enough to offset the costs that people will now have to pay thanks to Medicaid cuts.
So if anything, it’s going to be more expensive for low-income Americans. Restaurant workers are also “twice as likely to have incomes under the poverty line.” Many likely rely on Medicaid and now they’re going to be kicked off. Remind me again how tax cuts on tips is a win right now?
Published: May 23, 2025 07:58 am