The Pew Research Center has released a survey revealing that most U.S. adults perceive an increase in the expectation of tipping across various services, though many express confusion over tipping guidelines. This announcement was made on the center's website.
According to the survey, 72% of U.S. adults believe that tipping is expected in more places today than it was five years ago, indicating a shift in tipping culture. Despite this increase, only about a third of respondents find it extremely or very easy to know whether (34%) or how much (33%) to tip for different services. This uncertainty points to the evolving and often confusing nature of tipping expectations in the modern service economy.
Harvard Business School notes that the proliferation of digital payment systems has transformed tipping practices, introducing prompts for gratuities in scenarios where tipping was previously uncommon. These new point-of-sale technologies, such as those implemented by platforms like Toast, have expanded tipping expectations to include services like counter service or app-based orders. This shift challenges traditional tipping norms and suggests that legislation governing tipping practices must adapt to these technological advancements rather than rely on outdated standards.
The No Tax on Tips Act (H.R.482) offers a tax deduction of up to $25,000 for reported cash tips received in tip-based jobs, with a phase-out for high earners above $160,000. It also updates tax credits for employers to include payroll taxes on tips from workers in salons, spas, and other beauty services. Previously, these credits only applied to food and drink service tips.
The Internal Revenue Service (IRS) has introduced the Service Industry Tip Compliance Agreement (SITCA) program to improve tip reporting compliance by leveraging advancements in point-of-sale and electronic payment systems. This initiative aims to address the issue of unreported tip income, which was estimated at $1.66 billion annually. By utilizing electronic tracking, the SITCA program seeks to enhance transparency and ensure that both employers and employees accurately report tip income, thereby increasing tax revenue.
Pew Research Center is a nonpartisan, nonprofit organization that conducts public opinion polling and data-driven social science research on a wide range of topics, from politics to technology. As a subsidiary of The Pew Charitable Trusts, it is committed to objectivity, transparency, and methodological rigor.