No tax on tips? Local servers weigh in on Big Beautiful Bill incentive
Athena Jreij
PALM SPRINGS, Calif. (KESQ) — President Trump has signed his Big Beautiful Bill and some local servers could be cashing in on the ‘no tax on tips’ incentive.
The incentive was one of the President’s key campaign promises, drawing in voters with the promise to take home more cash.
Beginning the 2026 tax year, tip-reliant workers can deduct up to $25,000 if they make under $160,000 annually. Meaning if you work 5 days a week and deduct $25,000 a year, you’re likely to be going home with nearly $100 in untaxed tips a day.
However, some servers and restaurant owners in Palm Springs are still weary on the incentive’s benefits and are unsure about enforcement.
“The other part that, concerns me a little bit is we do automatic tips and our servers want us to include automatic gratuities on parties of eight or more, which we do, and we pay sales tax on that amount. That is not included in this benefit. So I’m not quite sure,” Willie Rhine with Eight4Nine said.
Rhine also said, ““How is this actually going to be enforced? It doesn’t apply to automatic gratuities, and we don’t track how much of the tips are automatically added for parties of eight or more. How will they determine if 100% of cash tips have been reported? There are a lot of unknowns, and it’s unclear whether employers or employees will be responsible for tracking this information.”
“When you really look deep into that bill, it’s not at all what we were sold,” Amanda Martinez with Sancho’s Mexican Restaurant & Cantina said.
Martinez says most of her wait staff don’t even make enough money in tips to pay federal income taxes.
“I just see a lot of our servers right now as it is, you know, with business being a slow season and not many travelers coming in at all. So it’s hard for all of us to be able to walk away with anything,” Martinez said.
Her and other industry workers question how much money they’ll actually go home with, since they still pay into Social Security and Medicare.
For one business owner, he worries what the bill’s other measures, including ramping up immigration enforcement, could mean for sales.
“A lot of things that are very threatening to us. Some of the immigration stuff. As an industry, we rely on immigrants,” Dean Lavine at the Blackbook said.
The ‘no tax on tips’ rebate will run through 2028.