Former President Donald Trump recently expressed his support for eliminating federal income and payroll taxes on tips. This proposal, initially mentioned in June, would cover both levies, according to Trump.
In an interview with Spectrum News 1 in North Carolina, Trump confirmed his backing for eliminating both federal income and payroll taxes. However, such a measure would need approval from Congress.
Currently, federal payroll taxes, which contribute to funding Social Security and Medicare, amount to 15.3%, with half paid by employers. If both federal income and payroll taxes were removed, it could result in a revenue decrease of $150 billion to $250 billion over the next decade, as estimated by the Committee for a Responsible Federal Budget.
Vice President Kamala Harris has also embraced the proposal. Nevertheless, a Harris campaign official previously mentioned that under her plan, tips would still be subject to payroll taxes.
The Budget Lab at Yale University highlighted that eliminating payroll taxes would benefit a larger portion of workers who receive tips, as over one-third of them do not earn enough to owe federal income taxes.
Both Trump and Harris unveiled their proposals in Las Vegas, Nevada, a crucial swing state known for its significant hospitality industry workforce.
