“We’re particularly interested in ensuring that the rule applies to all the job categories in the hotel industry that benefit from tips, and not just those traditional ones that are in restaurants.” Rosanna Maietta President and CEO of the American Hotel & Lodging Association “I think there’s broad support by both Democrats and Republicans, because we are in an environment where tipping is common practice,” Maietta told Hotel Dive. According to a Newsweek poll conducted in July of last year, some 67% of Americans did not believe tips given to service workers should be taxed. More recently, that support has resulted in legislative moves, with the AHLA-backed No Tax on Tips Act passing the Senate on May 23. The act, which Republican Rep. Byron Donalds of Florida introduced in the House in July and Cruz reintroduced in the Senate in January, includes an above-the-line deduction of up to $25,000 for federal taxes on tips. “This bipartisan legislation will put more money in the pockets of the hundreds of thousands of hotel workers who receive tips, ranging from housekeepers and valets to food service professionals and bellhops,” Maietta said in a statement upon the Senate’s passing of the act.
Meanwhile, other legislation to eliminate taxes on tips is still at play. The provision in Trump’s reconciliation package is similar to Cruz’s act in that it requires the Treasury to determine which professions will be eligible under the law. “The goal is to set some guardrails,” Maietta said of Cruz’s bill. “We’re particularly interested in ensuring that the rule applies to all the job categories in the hotel industry that benefit from tips, and not just those traditional ones that are in restaurants.” However, the reconciliation package provision differs from the No Tax on Tips Act in that it does not have a cap on the deduction. It also has a limited timespan. “It is temporary,” said Anne Bushman, a partner in RSM’s Washington national tax practice, about the reconciliation package’s taxes on tips provision. “It’s retroactive to January 1, 2025, and then set to expire December 31, 2028.” Experts told Hotel Dive that Senators could change the reconciliation package’s wording on taxed tips in coming weeks, but that the Senate’s approval of Cruz’s act means it’s likely the provision will remain in the package. To read this article in its entirety, please click here.
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