Kayleigh McEnany, co-host of "Outnumbered," said in a post on X that President Trump's economic doctrine, which includes no tax on tips, focuses on the economic agenda of working men and women.
"No Tax on Tips, No Tax on Overtime, No Tax on Social Security benefits," said McEnany. "Lowering price of drugs via Most Favored Nation. Tariffs as a temporary and strategic means to onshore American manufacturing."
According to the Internal Revenue Service (IRS), the taxation of tips has long been a contentious issue in the United States, particularly for service industry workers who rely heavily on gratuities for their income. Under current IRS regulations, employees must report any tips received, and these are considered taxable income. This includes cash tips, tips received from credit card payments, and tips distributed through tip pools. The IRS mandates that employees report tips of $20 or more in a month to their employer by the 10th day of the following month. These reported tips are then included in the employee's gross income and are subject to federal income tax, Social Security tax, and Medicare tax.
According to The Wall Street Journal, a recent federal tax proposal aims to exempt tips from income tax, benefiting traditionally tipped employees like restaurant and casino workers. However, independent contractors such as Uber and DoorDash drivers are currently excluded from this proposal despite their significant role in the tipping economy. These companies are lobbying Congress to include gig workers in the tax break, arguing that excluding them creates inequities among low-wage workers.
Tip income constitutes a large share of earnings for many service workers. According to the U.S. Bureau of Labor Statistics, the median hourly wage for waiters and waitresses, including tips, was $14.00 as of May 2023. Yet in some states, the base wage for tipped workers is as low as $2.13 per hour, with the assumption that tips will bridge the gap to meet minimum wage requirements. Because of this heavy dependence on tips, changes in tax policy can significantly impact their total income. If tips are taxed heavily, it could reduce take-home pay and make it harder for workers to meet basic living costs.
McEnany is a co-host of "Outnumbered" on Fox News and served as press secretary for President Donald J. Trump during his first term. She joined Fox News in 2021 and holds a Juris Doctor from Harvard Law School along with a degree in international politics from Georgetown University’s School of Foreign Service.