No tax on tips: House Republicans’ legislation and its impact on Nevada
In May 2025, House Republicans unveiled a sweeping tax package that includes a provision to eliminate federal income taxes on tips, fulfilling a campaign promise by President Donald Trump. This “No Tax on Tips” policy, embedded in a broader budget reconciliation bill, has significant implications for Nevada, a state with the nation’s highest concentration of tipped workers. Below, we explore the legislation’s details, its potential impacts, and its relevance to Nevada’s economy and workforce.
The Legislation at a glance
The No Tax on Tips provision, detailed in Section 110101 of the House Ways and Means Committee’s tax package, allows tipped workers earning under $160,000 annually to claim a 100% federal income tax deduction on their tips from 2025 to 2028. The policy applies to traditionally tipped roles, such as servers, bartenders, and casino dealers, but excludes highly compensated employees to prevent abuse by wealthy individuals or executives. The bill, which also includes tax cuts and spending reductions, aims to pass Congress by July 4, 2025, using budget reconciliation to bypass Senate filibuster rules.
Why Nevada matters
Nevada’s economy is uniquely tied to the hospitality and service industries, with approximately 20% of its workforce employed in roles like restaurant servers, hotel staff, and casino workers. The state’s powerful Culinary Workers Union Local 226, representing 60,000 hospitality workers, has long advocated for fair taxation and wages, making Nevada a focal point for this policy. Unlike many states, Nevada already requires employers to pay tipped workers the full minimum wage, not a subminimum wage, which amplifies the potential benefits of tax relief on tips.
Impacts on Nevada’s workers and economy
Financial relief for tipped workers: For Nevada’s tipped workers, the policy could mean significant savings. For example, a Las Vegas server earning $36,530 annually (the median for servers and bartenders) could save approximately $1,700 in federal income taxes, boosting their take-home pay. Workers like Sherie Cummings, a cocktail server at Mandalay Bay, have expressed enthusiasm, noting that taxes often consume much of their biweekly paychecks.
Economic Boost: Station Casinos executives estimate that eliminating taxes on tips could inject an additional $200 million into the Las Vegas economy, as workers spend their increased disposable income locally. This could stimulate small businesses and the broader hospitality sector, a cornerstone of Nevada’s economy.
Industry recruitment: The National Restaurant Association supports the policy, arguing it could attract more workers to an industry that is chronically understaffed. In Nevada, where tourism drives job creation, this could help address labor shortages in restaurants and casinos.
Relevance to Nevada’s future
The No Tax on Tips legislation resonates deeply in Nevada, where tipped workers are the backbone of the tourism-driven economy. The policy aligns with Trump’s 2024 campaign focus on Nevada, credited with helping him win the state by 3% over Kamala Harris. However, its temporary nature (expiring in 2028) and the broader bill’s controversial elements raise questions about long-term benefits versus costs. For Nevada’s hospitality workers, the promise of keeping 100% of their tips is a tangible win, but its success depends on navigating Congressional negotiations and addressing concerns about deficit growth and social program cuts.
Conclusion
The No Tax on Tips provision is a tailored response to the needs of Nevada’s tipped workers, offering financial relief and economic stimulus in a state reliant on hospitality. While it enjoys broad support, its inclusion in a contentious Republican budget bill complicates its path forward. For Nevada, the policy could reshape the financial landscape for thousands of workers, but its ultimate impact hinges on balancing worker benefits with fiscal responsibility and social safety nets. As Congress debates the bill, Nevada’s tipped workers and unions will be watching closely, hopeful for a policy that delivers on its promise.
Sources: Newsweek, The Nevada Independent, NPR, The Guardian, USA Today, Reuters, posts on X
