US President Donald Trump has announced his intention to include the elimination of taxes on tips in a legislative package being developed with Republican lawmakers.
The plan, a central campaign pledge during his re-election bid, was unveiled during a speech at the Circa Resort and Casino in Las Vegas on Saturday.
Trump emphasised the importance of the proposal for workers who rely on tips, stating, “We’re going to get it for you. No tax on tips. So, if you’re a restaurant worker, a server, a valet, a bellhop, a bartender, one of my caddies ‒ I go through caddies like candy, if I play badly, I always blame my caddy ‒ or any other worker who relies on tipped income, your tips will be 100% yours.”
This initiative is part of a broader reconciliation bill aimed at enacting Trump’s domestic agenda, which includes proposals on taxes, energy, and the border. The use of the budget reconciliation process allows Republicans to bypass the Senate filibuster and pass budget-related legislation with a simple majority vote.
Republicans currently hold a 53-47 majority in the Senate, enabling them to approve the package along party lines. Trump and House Speaker Mike Johnson favour passing the reconciliation package as a single bill, while Senate Republicans are considering a piecemeal approach.
The Committee for a Responsible Federal Budget has estimated that eliminating taxes on tips could decrease federal revenues by $150 billion to $250 billion over the next decade. Trump, however, hinted at broader ambitions for tax reforms, saying, “How about just no tax? You know, if the tariffs work out like I think, a thing like that could happen, if you want to know the truth.”
Trump credited this policy with helping him secure Nevada in the 2024 election, which he won by about 3 per cent over Kamala Harris.
Harris had proposed a similar plan to eliminate taxes on tips after Trump introduced his policy on the campaign trail.
In addition to the “no tax on tips” proposal, Republicans plan to extend Trump’s 2017 tax cuts, which are set to expire at the end of the year. However, the proposal faces challenges, including debates within the Republican Party over linking steep tax cuts to debt ceiling negotiations.
Congress must also address looming deadlines, such as raising the debt ceiling and funding the government before March 14 to avoid a shutdown.
Trump’s promise to eliminate taxes on tips reflects his broader effort to support working-class Americans while pushing for sweeping tax reforms. As the legislative process unfolds, the proposal will remain a key focus in Washington’s ongoing fiscal debates.
(USA TODAY)
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