In January, President Trump reiterated his campaign pledge to make service‑industry tips 100 percent tax‑free, telling a Nevada audience that “your tips will be 100 percent yours.” Shortly after, Rep. Vern Buchanan (R‑FL) and Sen. Ted Cruz (R‑TX) introduced the No Tax on Tips Act, which would let eligible workers deduct up to $25,000 in qualified tip income when they file their federal return. The bill limits the break to traditional tipped occupations—servers, valets, hotel staff, stylists and more—and excludes highly compensated employees.
Why the Plan Matters
A bigger pay‑packet when every dollar counts. For a valet earning $30,000 in wages and $10,000 in tips, eliminating federal income tax on tips alone could keep roughly $1,200–$1,400 in their pocket each year, based on today’s brackets.
Simpler record‑keeping—maybe. Tips have long triggered extra paperwork for employers and workers alike. A codified “zero‑tax” line could streamline reporting (although payroll and FICA rules would still need clarity).
Potential ripple effects. Critics warn that employers might lean on untaxed tips instead of raising base wages, or that the rule could widen gaps among low‑wage workers who don’t receive gratuities.
Where the Proposal Stands
At the time of writing, the bill is in committee and has bipartisan co‑sponsors, but lawmakers still need to hash out cost estimates, FICA treatment and fraud‑prevention mechanics. In other words: momentum is real, but “tax‑free tips” is not yet law—service professionals should stay tuned.
Whether the bill passes tomorrow or stalls for months, digital transparency is your best friend 🔎. Here’s how our SimplyTip ecosystem is designed to put workers and businesses on the front foot:
Crystal‑clear reporting. Every NFC or QR transaction is logged in real time inside the Requite Community Portal, giving managers a single export that can slot into payroll or tax software the moment rules change.
Workers can likewise view real-time updates on tipping trends and payouts in the SimplyTip mobile app
Less liability and administrative overhead. Requite’s solution is end-to-end, meaning we support you from tip collection to payout. Automate payouts from the Community Portal. Pool tips–or don’t. Automate payouts from the Community Portal and eliminate human error or push tips through to your payroll and manage yourself. The workflow is your choice!
IdealTip™ presets = higher totals, faster. Research shows 1‑tap checkouts can lift spending by nearly 30 percent—our pre‑configured options, from $2 to $100, apply that science to tipping.
Instant payouts, no bank necessary. With Express Payout options (ACH today—digital Requite Wallet tomorrow), staff see earnings hit their balance in hours to seconds, not weeks, making any new tax savings immediately available. Tips that pass through payroll are pre-taxed and it can be weeks before workers can see them 😩 SimplyTip’s benefits are felt by your team from day 1 to day X, when No Tax On Tips becomes a reality.
No more “Screen‑Flip” guilt. Because SimplyTip lives outside the POS, guests feel confident tipping fairly without the awkwardness and anxiety that fuels “tip fatigue.” Addressing tip fatigue without hurting employee compensation or raising prices is a tightrope walk ⚖️ SimplyTip gives businesses the tools and data to find this balance as the tipping economy continues its march towards $50 billion 💸
What Employers Should Do Now
Audit your tipping flow. Is cash still king? The numbers say no. Only 16% of transactions use cash and more than ⅔ of Americans don’t carry cash. Every business is different but you may be leaving revenue—and prospective tax savings—on the table.
Bolster digital records. Even if tips become tax‑free, the IRS will likely require substantiation. Digital rails make that painless + gives businesses the option to allow workers to self-manage tax obligations.
The No Tax on Tips proposal could let millions of service‑industry workers keep more of what they earn, but the real win comes from pairing policy with tools that maximize tips in the first place. Requite’s mission is to eliminate friction, surface data and give every guest an effortless way to say “thank you.”
Ready to future‑proof your tipping strategy? Book a 15‑minute demo today or email us at info@requite.tech.
[Disclaimer: The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Requite does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.]
