I would probably leave the change: $17.35 -> $18

Like at the grocery store. Round up to the next dollar and the change goes to charity. Although, many may argue that "tips" are charity.

No income tax on tips (and no income tax on overtime) is unfair to both regular hourly and salary workers. Why should servers bring home income money that is tax free?

Skip

I think the theory is that the servers are underpaid (although I have always heard that many servers do not report cash tips anyway).

And while some are underpaid, many are not. A friend of mine owns a nice restaurant and she said that some of her servers make a lot of money with tips.

As for overtime, many government workers and construction workers are well paid before overtime. However, I think that has income limits on it.

I don’t understand why most European countries can afford to pay their servers a decent wage so that tipping is not expected while Americans cannot do it. Restaurant prices in Europe don’t seem to that much higher than in America especially when the tip and sales tax is included in the price listed on the menu.

Interesting. My go to behavior is I start with 15%. Good service, I add, bad service, I subtract. I do not tip for take out, at a coffee establishment or anywhere else where the service staff does not do personal service. I think all people deserve proper wages but it should be given by their employer who can reflect this in their prices.

So if you're a Consultant and charge a client, $100/hour ...

After Federal Taxes, you have about $75 left.

After you pay both sides of FICA, you $60 left.

Let's assume your "overhead" (office, equipment, phone, Insurance, etc.) is $10/hour

You now have $50 left.

If you take yourself to dinner & it cost you $40 + 25% Tip, you have ZERO left.

If your waitress is handling 5 tables, 10 people ... she just made $100/hour and gets to keep it all.

Better to quit the Consulting business and be a server.

There’s an expectation for doing your job, then there’s the extra effort put forth. I don’t mind paying for the extra effort, but to do the basic minimum, you shouldn’t expect more from me.

Furthermore, just like when I donate to charity, I like to know exactly where the money goes. What % actually benefits those in need vs the administrators? Same with those buttons on the credit card machine, if I select 15%, who exactly gets that tip?

I absolutely do not do all this "round up for charity" nonsense. I take my hard earned money and donate to the charity of my choice . I do not give this money to Publix so that they can give to a charity and claim my donation on their taxes.

Good service? When you are a waiter/waitress everything I have experienced in most restaurants is what I would expect as basic job requirements. It's not like they give you a back rub, shine your shoes or spoon feed you.

One could argue that the tip is a gift of appreciation and therefore, not income. (I assume at some point, someone has...and lost)

Good for you. And remember, charity begins at home. That way you can continue to afford to shop at Pubelicks and tip your waiter/waitress for fulfilling their job requirements.

I wonder if your tipping practices follow your comments on tipping and are reflected in the way you are treated by the servers who recognize you.

We generally get great service - there just might be a correlation.

And you would be correct. Have a chocolate cigar.
A tip is what you get at the race track.
A gratuity is what you give someone who has gone out of their way to make your experience exceptionally memorable ... in a good way, that is. Calling me Hon (hun?) and telling me to have a blest day hardly counts as making my experience "exceptionally memorable" in a good way.

Wonder no more. I am treated as well as most folks. We only frequent a couple of places often enough to be of notice. We usually tip at 20%, as that seems to be the standard (as far as we can tell).
I, we, follow local custom wherever we are. Here, people tip, so we do as well. But just because we follow custom doesn't mean we agree with it. I don't say "grace" before I eat, but if I'm with someone who does, I respect their feelings. Just because I tip doesn't mean I agree with the practice. I believe tipping allows restaurants to report lower taxable bottom line per the "out-the-door" expense per customer. When two clients orders require the same amount of work expense (number of dishes, silverware, glasses and effort for the server) and the only difference is the chopped steak vs filet mignon, coke vs cocktail, green beans vs roasted asparagus, fries vs baked potatoes, ice cream vs tiramisou. One meal twice the cost of the other, but no difference in worker effort. Tip, imho, should be the same for both. Equal pay for equal work. Do you disagree?

Jeez I think y'all need to stop posting until you start reading. The new bill doesn't have "no tax on tips." That is propaganda, it's not true, it's not in the bill. If you'd actually read the bill you'd know that.

It's a tax DEDUCTION - not a tax-free income. You get to deduct $25,000 from your tipped wages at the end of the year. If you were tipped well all year long, at a fancy restaurant where the average tip was $50, and you had 10 tables per night (that's $500 just in tips), and you worked 5 nights a week (that's $2500 per week) then your yearly TIPPED wage will be $130,000 just in tips alone. You can deduct $25,000 from that, and you pay income tax on the balance.

Back in the day, my grandmother used to tip $2 for a table of 2 adults, 2 children. Fifty cents tip per person. No matter what she ordered, or how expensive the tab was. Now, this was back in the 1960's-1980's, when the highest minimum wage was $3.80/hour. So an extra $2 for a table of 4 taking up space for just 45 minutes was actually not bad at all. Especially if you had more than one table to serve during that hour. In 1960, $2 was actually a lot of money. Minimum wage was just $1/hour. She said the waitress was either worth it, or not worth it. So if she didn't tip at all, it was because the waitress did something wrong. If the waitress got a tip, it was because she did her job.

Please explain the difference between “tax free” and “DEDUCTION” and subtracting $25,000 before calculating taxes. If I subtract that amount as a deduction before calculating taxes then it really feels like I made that income tax free.

Yes, it is only $25,000 but it is a deduction that most of us won’t get.

Yes(2), it is a deduction from Federal income tax but is still subject to other withholding taxes and probably state income tax. But again, it’s something.

We had lunch at Amerikanos today. My husband (former labor relations, interested in this) said to the waitress, "None of my business, but can I ask you if you'd rather have minimum wage or tips?" Her answer: Tips! She said she makes $9.98/hour (state law), and during the season does fantastically thanks to tips. Not as good off season, but overall more than just minimum wage.
That's one person's answer...

No income tax on overtime is very fair to regular hourly and salary workers. Salary workers can negotiate their terms and value to the company. Few people absolutely love overtime and avoid it at all costs. Mandatory overtime is an onerus to many. Some workers need the overtime to make the ends meet in the middle even though they would rather not be doing it. Try standing in a factory which runs about 100 degrees on a summer day, lifting product, running presses and tell me how you would enjoy mandatory overtime. Those are people from the working crowd so you can enjoy your retirement.

AI: Overtime work, while offering potential financial gains, can lead to several drawbacks, including decreased productivity, increased health risks, and a strained work-life balance. Excessive overtime can lead to burnout, impacting both physical and mental health.

I was a salaried worker. I never negotiated the terms of my employment and to my knowledge, no one at my level did. I think senior vice presidents and above did that.

And I worked overtime most weeks - I just didn’t get paid for it.

There's no state income tax in Florida, so that doesn't apply here (though yes, it does apply in states with state income tax).

If you earn more than $25,000 in tips in a year, you have to pay federal income tax on everything above the first $25,000. That means - it isn't "no tax on tips." It's "tax on all tips beyond the first $25,000."

Math: $24.04 per hour is what you'd earn, just in tips, to earn $25,000 in tips in a year if you work 20 hours per week at your tip-paying job.

If you work the dinner shift at the FMK restaurants or places like Legacy Lopez CC, you'll be serving more than two tables per hour, and you'll likely be averaging more than $24.04 per hour in tips as a result. Add all those hourly tips up and at the end of the year, you will have earned more than the deduction you're allowed to take, and pay federal income tax on the balance. PLUS you still pay federal income tax on your hourly wages.

No surprise here. My focus is not on the waitstaff. It's the customer position.
The customer pays a price, part of which goes to cover employee pay. So, waiter gets a cut. Tax is added. The comes the tip. Now the wait person has an opportunity to dramatically increase their "cut" through sweet talking, cajoling, persuasion, etc. Pitty the poor server. A good actor can make a lot more than a bad actor. If it wasn't for tipping, restaurants would be paying more tax. Servers would be tax liable for all their income. Customers wouldn't have to figure the appropriate cost of being called "Hon". He/she ain't your friend. It's about getting the biggest present they can from you. It's a con, a game, a scam, that we all play. But it isn't an honest hourly wage for labor. Restaurant owners are complicit in this for their own reasons.
Tonight's nice dinner out and the waitress pocketed $20+, on top of her regular pay, for the 10 minutes that she spent on us.

So which are the deserving category of workers that should get a tax break and which are the ones that don’t deserve the tax break?

If the concern is that the workers should be paid minimum wage, if workers aren’t tipped, the employer is required to pay minimum wage.

I believe that California requires that employers pay the full minimum wage regardless of tips. So if a waiter is making $25 an hour in tips, they still get the minimum wage of $16.50 an hour.

If you go to California do you tip less?

Why aren't all "employees" getting paid in full by their [/B]employers[/B]. Why are we giving extra money to people who have a job and an income. Where is the employee loyalty if the customer pays a greater portion of the employees income. Earlier I said our waitress this evening at a local Villages restaurant, got a $20 for our meal, and about the same from other couple at our table. She had 5 tables I could see. Three tables of 4 and two tables of 6. $40 from our table and, presumably, the same from the other 4 tables. That could reasonably be $200 p/h. $200 per hour? In TIPS! If the waitress isn't getting every dollar we gave to her, who is?

You can spend a lot of space working math problems but that doesn’t change the fact that this deduction, only available to some tipped workers, will exempt the first $25,000 in tips from federal income tax.

That decision was political.

When in Rome…

Eat at home, problem solved.

Under the working conditions I described? Our children are salaried too but if they aren't salaried enough for their efforts, they would change jobs and do just fine.

I think every bill passed by congress is political.

But if you could make the decision, which group of workers should get the tax break? Explain how you reached your conclusion.

You say that if your children aren’t salaried enough for their efforts they would change jobs and do just fine.

Doesn’t that same rationale apply to the person working in a factory which runs about 100 degrees on a summer day, lifting product, running presses?

And to answer your question, my working conditions were not that bad. But I don't think the tax benefits for overtime are limited to workers with those conditions.

Many government employees get overtime. This includes transit workers, the post office, TSA, VA, CPB, and FEMA. Most of those jobs are hard to get. And the people that I know that work in those areas usually want overtime.

Regarding your last paragraph, ALL Federal employees who work on the GS pay scale are actually hourly workers. Their annual pay is based on 40 hours per week, and it is illegal to require additional work without paying them overtime if they file for it. This even includes GS-15 white collar employees who are at the top of the Government pay scale. As an Inspector General, I handled several cases of this, and the department head was sometimes surprised that they could only require their top managers to work 40 hours per week. This is a huge difference from the private sector.

Tipping For Takeaway
 

By far the most irritating and undeserving tipping situation is when I pick up a pizza. I see zero need to place money in a tip/handout jar for a “to-go” order I placed on the phone and picked up myself. The “icing on the cake” is when I charge for the pizza and the receipt has a tip/gratuity line to fill in!

Tipping needs to be a thing of the past. In Europe no one tips, it seems to be more an American thing.

It’s not built in. Is it a mandate that all old people start complaining about the price of things? Did you not plan correctly? You want to go out, have someone wait on you and not tip them for doing that? That’s not how life works. You get what you pay for. They have plenty of places for you to eat where you don’t have a server to tip. Go there and stop griping about tipping. The fact you think 13 dollars an hour is enough to live on makes me very curious about your age and where you came from. Jeez. 30 dollars an hour isn’t enough to live on in this time.

Most overtime jobs are those in the manual labor and not pencil pushers. Yes, I am indicating that those in higher paying jobs have more opportunity than a factory worker for job shopping. The limit for overtime tax free is $12,500. That can mean the difference between self-supporting or living off the government (us).

No! The problem still exists, whether I participate or not.

I did not know that!!

Yes it will. I'm not challenging that assertion. I'm challenging the assertion that it is - specifically - "no tax on tips." That's the topic of this thread, that's what everyone is commenting about.

It isn't "no tax on tips." It's "deduction on SOME tips." Words have meanings.

Seniors have deductions that younger people don't have. Veterans get tax breaks that non-veterans don't get. Rich people get tons more deductions than poorer people get, and some of them can deduct so much, that the tax they pay to the IRS ends up being LESS than what some poor people pay.

Words have meanings. The words “all” or “any” would indicate a 100% deduction. Those words were not used.

Note: I stopped reading anything into campaign promises after the "Read my lips" incident.

I remember when waiters and waitresses were kids going to school or older people supplementing their income.

The group of workers that should get the tax break is NO ONE or EVERYONE. Special carveouts always backfire.

The tax break that should be given, if one must, is to eliminate the tax on long term capital gains after changing the definition of "long term" to at least 2 or 3 years instead of 1. Much of what is being taxed is the unrealized inflation rate applied to the asset, which is ridiculous. Of course, this will never happen, bc then certain people would be screaming that it's a tax break for "the rich".