Overview

• The House Ways & Means Committee approved a Republican budget bill that includes a temporary tax deduction for tipped workers earning under $160,000 annually, set to expire in 2028.
• The provision fulfills a 2024 campaign promise by Donald Trump to eliminate federal income taxes on tips, a move supported by Nevada Democrats and labor groups but criticized for its limited scope and temporary nature.
• The Joint Committee on Taxation estimates the tip deduction will add $40 billion to the federal deficit over the next three years, raising concerns about fiscal responsibility.
• Nevada Democrats back the tip tax relief but oppose the broader budget package, which includes cuts to Medicaid and food assistance programs and permanent extensions of the 2017 tax cuts for higher earners.
• Experts warn the measure could lead to unintended consequences, such as employers suppressing wages or consumers tipping less, and note that the bill may undergo changes as it progresses through Congress.