Florida congressmen introduce No Tax on Tips Act in U.S. House

Two congressmen from Florida have filed a bill to exempt tips from federal income tax, following up on a campaign promise made by President-elect Donald Trump.

Reps. Vern Buchanan and Byron Donalds, both Republicans, introduced the No Tax on Tips Act in the House, the pair announced Thursday morning.

The bill is co-sponsored by Rep. Steven Horsford (D-Nev.) and Rep. Derrick Van Orden (R-Minn.).

A companion bill has been filed in the Senate by Sen. Ted Cruz (R-Texas).

How would the No Tax on Tips Act work?

Big picture view:

The bill would allow certain workers who earn tips to claim a deduction of up to $25,000 per year, adding that "highly compensated employees" wouldn't be able to claim the deduction.

Eligibility for the deduction would also be limited to "traditionally tipped occupations," including waiters, hospitality workers and beauticians.

Local perspective:

Reps. Buchanan and Donalds pointed out the importance of the tourism and hospitality industries to Florida's economy, citing data from Visit Florida showing that tourism supported 2.1 million jobs statewide in 2023.

For a closer look at Visit Florida's tourism data, click here.

Trump supports tax-free tips

The backstory:

Last June, then-candidate Trump proposed making tips tax-free, but did not give specifics at the time as to how the plan would work.

PREVIOUS: Trump proposes making tips tax-free. Here's what it would mean for workers

Reps. Buchanan and Donalds mentioned "fulfilling President Trump's promise" in their announcement Thursday.

"I’ve long believed the GOP should be the party of bartenders, of waiters and waitresses, and this bill is an important step to ensure we are addressing the economic needs of working Americans," said Rep. Donalds.

The other side:

According to an AP report last year, the nonpartisan Committee for a Responsible Federal Budget estimated that exempting tips from federal income and payroll taxes would reduce federal revenues by $150 billion to $250 billion over the next 10 years.

Experts told the AP that the plan could have negative effects, including some customers limiting how much they tip, along with dampening efforts in certain states to raise the minimum wage for tipped workers.

The Source: This story was written using information from a news release announcing the No Tax on Tips Act, along with previous reports from FOX Digital and the Associated Press.

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