Former President Donald Trump promised that if elected president in November, his administration will eliminate taxes on tips.
During a rally in Las Vegas, Nevada, on Sunday, Trump told the crowd his administration would not be taxing the tips of people working in hotels, restaurants, or other jobs.
“So, this is the first time I’ve said this. And, for those hotel workers and people that get tips, you’re going to be very happy,” Trump announced. “Because when I get to office, we are going to not charge taxes on tips — people making tips.”
Tips are described as being, “discretionary (optional or extra) payments determined by a customer that employees receive from customers,” according to the Internal Revenue Service’s (IRS) website.
Employees can receive cash tips, tips left through a credit or debit card, or “tip amounts received from other employees paid out through tip pools” or “tip splitting.”
The IRS notes that “all cash and non-cash tips” an employee receives are “income and are subject to Federal income taxes”:
All cash and non-cash tips an received by an employee are income and subject to Federal income taxes. All cash tips received by an employee in any calendar month are subject to social security and Medicare taxes and must be reported to the employer. If the total tips received by the employee during a single calendar month by a single employer are less than $20, then these tips are not required to be reported and taxes are not required to be withheld. Cash tips include tips received from customers, charged tips (for example, credit and debit card charges) distributed to the employee by the employee’s employers and tips received from other employees under any tip-sharing arrangement. Tips also include tips received by both directly and indirectly tipped employees.
“We’re not going to do it,” Trump added. “And, we’re going to do that right away, first thing in office. Because it’s been a point of contention for years and years and years, and you do a great job of service, you take care of people.”
Trump added that his administration would not be “going after” the taxes of the people who “have jobs in restaurants” where they receive tips.
