Debate Heats Up Over Trump's Tax Plan on Tips: Whom Does It Really Benefit?

The U.S. restaurant industry is divided over President Trump's proposal to eliminate federal taxes on tips, with some claiming it aids few workers and overlooks deeper wage issues. The House backs the measure, but the Independent Restaurant Coalition argues it neglects many non-tipped workers. The debate continues as service charges rise.

The U.S. restaurant industry is at odds over President Donald Trump's proposal to abolish federal taxes on tips. Critics argue it would benefit only a fraction of workers, overshadowing broader wage concerns within the industry. The Independent Restaurant Coalition, representing nearly 100,000 eateries, urges Congress to reconsider this proposal.

The House has already included the tax-free tips idea in a recently approved tax cuts package. According to the plan, federal income taxes on tips will be eliminated for workers earning up to $160,000 by 2025. Both Trump and former Vice President Kamala Harris campaigned for this benefit during the last U.S. presidential election.

Despite backing from the National Restaurant Association, which claims it could aid over 2 million servers, the proposal faces criticism for ignoring millions of kitchen staff who earn no tips. Restaurant owners across the nation are experimenting with service charges, advocating for a tax-free status for these charges to ensure fair compensation for all employees.

(With inputs from agencies.)