President Donald Trump reaffirmed his pledge to eliminate federal taxes on tips during a rally in Las Vegas on Saturday, signaling to Congress that the policy remains a priority in his second term. Addressing a crowd of roughly 1,000 supporters at the Circa Resort & Casino, Trump promised relief for millions of tipped workers, though details on implementing the plan remain sparse.
"We're going to get it for you-no tax on tips," Trump said, standing behind a podium emblazoned with the campaign slogan he popularized in 2024. The rally marked Trump's first swing-state visit since his inauguration last Monday and served as both a celebration of his November victory and a preview of his legislative agenda.
Trump's victory in Nevada, the first for a Republican presidential candidate since 2004, came in part due to his focus on the state's hospitality-driven economy. Nevada has the highest concentration of tipped workers in the nation, with wait staff, valet attendants, and casino employees making up a significant portion of the workforce. Trump first introduced the idea of eliminating taxes on tips during a Las Vegas campaign rally in June, a proposal that resonated with many hospitality industry workers.
While popular among workers and some industry leaders, the proposal has drawn criticism from economists and labor advocates. Ted Pappageorge, secretary-treasurer of Nevada's Culinary Union, welcomed the idea but cautioned that it should not stop there. "Eliminating taxes on tips and ending the $2.13 sub-minimum wage will uplift millions of hospitality workers," Pappageorge said. He emphasized that many employers rely on tips to meet minimum wage requirements, leaving workers financially vulnerable.
Trump's plan, if implemented, would exempt gratuities from federal income and payroll taxes. Critics, however, have raised concerns about the economic implications of such a policy. The Committee for a Responsible Federal Budget estimates the measure could reduce federal revenues by $150 billion to $250 billion over ten years.
"It's not a good way to help low-income workers because the vast majority of low-income workers don't get tips," said Bill Gale, co-director of the Urban-Brookings Tax Policy Center and an economist during the George H.W. Bush administration. Gale and other experts argue that the policy could complicate the tax code and create opportunities for abuse, such as high-income earners reclassifying their income as tips.
Heidi Shierholz, president of the Economic Policy Institute and a former labor economist in the Obama administration, described the policy as "terrible." She argued that raising the federal minimum wage and eliminating the tipped minimum wage would more effectively address wage disparities.
Despite these criticisms, Trump's proposal has garnered bipartisan interest. Earlier this month, Nevada's two Democratic senators joined Republicans in reintroducing legislation to exempt tips from federal taxes. Sean Kennedy of the National Restaurant Association, which supports the bill, noted its potential to attract more workers to an industry struggling with chronic staffing shortages.
For many tipped workers, the idea of tax relief is an immediate draw. At the rally, Trump highlighted the potential impact on workers in the hospitality sector, stating, "If you're a restaurant worker, a server, a valet, a bell hop, a bartender, one of my caddies, your tips will be 100% yours. "