Working for tips is inherently challenging. The experience shared by a former server at a Maine hotel illustrates this reality well. For years, he navigated the unpredictable nature of tip-based income, which fluctuated from night to night. “Some nights, I’d make $200 or even $300. Other nights, I’d make half that, or less,” he recalls. This unpredictability affects personal finances and adds a layer of stress, especially during difficult times such as the pandemic when indoor dining was nonexistent.
The server’s journey reflects broader concerns in the tipped workforce. Many depend on tips as their primary source of income. The former server faced significant decisions at tax time, particularly regarding reporting income. “I always made the lawful choice,” he affirmed, yet recognized the temptation to underreport. The Census Bureau’s data shows that a substantial portion of tipped income—approximately $8 billion annually—was left unreported, driven by the financial strain many face.
A recent tax reform, driven by the Trump administration, presents a beacon of hope. The tax bill offers relief for tipped workers by exempting most tipped income up to $25,000 from federal taxes from 2025 to 2028. This significant change reduces the incentive for workers to conceal their earnings. “It’s a win for working families and the rule of law,” he asserts, underscoring the benefits that higher reported incomes bring—better qualification for credit and loans, crucial for purchasing cars or homes.
While the federal reforms offer vital relief, state policies remain an obstacle. More than half of the states still impose taxes on tips, undermining the federal reforms’ intent. The former server emphasizes the negative impact of state taxation, pointing out that even minor tax collections translate to substantial savings for workers. “Every dollar they pay to Augusta is a dollar they can’t spend on their families and futures,” he states emphatically, highlighting a critical tension between state revenue needs and worker welfare.
The contrast among states illustrates a varied approach to tip income taxation. Some governors, like Gretchen Whitmer of Michigan, have embraced the federal stance, showing responsiveness to worker needs. Others, particularly in blue states, have resisted changes that could ease burdens on tipped workers. The former server criticizes these governors, particularly Maine’s Janet Mills, for falling short of providing meaningful relief. He points out the absurdity in Mills’ reluctance to support no-tax policies despite the minimal impact on state finances compared to the significant benefit for workers. “They’re giving a middle finger to workers who want and need relief,” he argues, emphasizing the critical bond between government policy and the everyday struggles of working families.
The frustrations extend beyond Maine. Arizona’s governor, Katie Hobbs, vetoed a bill that would align the state’s tax laws with the federal reforms—ostensibly to support the middle class while neglecting the direct needs of workers. Similarly, Wisconsin’s Governor Tony Evers has remained silent on conforming state policy, suggesting a potential veto of beneficial measures. The former server expresses a clear desire for bipartisan support in making meaningful changes. “Ending taxes on tips won’t help me anymore, but it would help millions of workers,” he notes, reinforcing that these reforms extend beyond individual profit to aid entire communities burdened by inflation and economic obstacles.
This experience encapsulates the ongoing struggle for tipped workers in America. The federal tax cuts under Trump have laid the groundwork for positive change, but state lawmakers must now step up. The former server’s narrative sheds light on the urgent need for policies that truly support the backbone of the service industry—those who work tirelessly for their livelihoods in the face of uncertainty.
"*" indicates required fields
