What Does the ‘No Tax on Tips Act’ Mean for Wyoming’s Blue Collar Workers?

Today Senators unanimously passed the "No Tax on Tips Act," but the bill still needs approval from the House and Mr. President before it becomes law.

The legislation would create a new tax deduction worth up to $25,000 for tips, limited to cash tips that that workers report to employers for withholding purposes on payroll taxes. The tax break is also restricted to employees who earn earn $160,000 or less in 2025, an amount that will rise with inflation in upcoming years.

The act was first introduced in January by Texas Senator Ted Cruz and a bipartisan group of cosponsors includign Nevada's two Democratic senators, Jacky Rosen and Catherin Cortez Masto.

"Whether it passes free standing or as part of the bigger bill one way or another, 'No Tax on Tips' is going to become law and give real relief to hard working Americans," said Cruz. "So I’m proud of what the Senate just did, and I commend Democrats and Republicans, even at a time of partisan division, coming together and agreeing on this common sense policy."

Wyoming Senator Cynthia Lummis today issued a statement on the passage of the legislation.

"The Senate passage today of President Trump's No Tax on Tips proposal is a victory for Wyoming's blue-collar workers who will now keep every dollar they earn in tips. I support this common-sense tax relief that puts more money into the hands of Wyoming workers while upholding the conservative principle of rewarding hard work.”

In 2015, Wyoming had roughly 50,000 workers in blue-collar industries, representing 35% of the state's total workforce.

The Center for Economic and Policy Research (CEPR) reported that Wyoming had 17.5% of blue-collar jobs in 2017. This indicates that a significant portion of Wyoming's workforce is engaged in manual or physical labor.

While it's challenging to give an exact number of tipped workers in Wyoming, a substantial number of restaurant employees rely on tips as a primary or secondary source of income.

In Wyoming, an average of 33% of servers' income is from tips, meaning that a significant portion of their wages are directly dependent on customers.

Elminating taxes on tips will have a range of impacts on workers, employers, and government revenue.

An article from the Economic Policy Institute cautions that the "No Tax on Tips Act" could be dangerous by expanding the use of tipped work, a system they're calling "rife with discrimination and worker abuse." They worry about worker pay increases being undermined while at the same time depleting state and federal budgets.