Taxes on tips

[Old Crank]

From a few days ago.
Real problems and this legislation won't help people much. Plus the $160,000 earnings is way too high.

“About 4 percent of families report tips to the IRS, and those who do are disproportionately young, unmarried, and lower-income, according to an analysis of the proposal by the Budget Lab at Yale University. “This means that many tipped workers do not pay income tax to begin with and would not benefit from a new deduction.”

https://www.washingtonpost.com/business/2025/05/23/no-tax-on-tips-tipping-fatigue/?utm_campaign=wp_post_most&utm_medium=email&utm_source=newsletter&carta-url=https%3A%2F%2Fs2.washingtonpost.com%2Fcar-ln-tr%2F42b4054%2F68309a23f2226907c923ce50%2F5c016898ae7e8a6dbe99f09f%2F23%2F54%2F68309a23f2226907c923ce50

[Lovie777]

1. From what I've read...................

if you use credit and or debt card to include tips along with payment of meal it become taxable. If you give cash as a tip it's not taxable. 99% I myself gave cash to the waitress/waiter for years. In speaking with them many have told me especially in using credit/debt cards re tips it's put in a pool and supposedly equal shares go to the waitresses/waiters and owners take a share as well.

Waitresses/waiters make much less than minimum wage.

[Old Crank]

2. Tips and income.

Tips aren't supposed to go to owners or management. I believe that is illegal.
When my ex worked at restaurants she always gave the bus people a piece of the action. She said they did a lot of stuff to make their lives easier. Non-pooling places.

Decades ago the IRS set the income rate for tips at 8% of the value of the meals. $1,000 of sales would means the server would be assumed to make $80 on tips. Credit card or cash. If you tracked all your tips you could declare the income. You would need to track all tips to get under the 8% assumption. The largest complaint I heard was from people who collected a lot of tips and the tax had to be pulled from their checks. Sometimes leaving close to nothing. (Especially true for places where the earingins were really small.

This law is going to be a huge pain and a farce. Many aren't going to see any gain because they fall under the taxable income limit.

[bucolic_frolic]

3. I wonder if Krasnov tips won't be smaller

since the public knows it will be untaxed.

[dem4decades]

4. This is such bullshit, the local restaurant i go to, the bartender and waitressthe

Make a lot of money in tips, I don't know what their base salary is but in this state they get paid a fair wage. They make more than the cooks and the dishwashers, who pay taxes on their entire wage.

How is that fair?

[doc03]

5. I worked 45 years and paid taxes on every penny I made. I think they should pay

taxes the same as everyone else.

[RoeVWade]

6. Yes, if you're in a low tax bracket, that really should take care of excessive taxation. That's why we have those.

nt*

[Bluestocking]

7. Tips will decrease by 25%

I think what may happen is people will figure since not paying income tax can leave smaller tip. 20% tip will become 15% tip. Those who don’t pay income tax since wages too low will see their income go down.

[mopinko]

8. does this include fica?

cuz if u arent paying into fica, you’re f’d when u get old.
or if u become disabled, or die when u have kids.

[Old Crank]

9. From the articles I have read.

From several sources, declared tips will be subject to FICA.
So for every dollar in tips the worker will pay 7.5 cent. Not sure about the boss match.