Trump delivered for tipped workers. Why do Democratic governors hate them?
It’s never easy working for tips. For eight years, from 2014 to 2022, I did just that. I was a server at a Maine hotel, taking orders at the restaurant and bringing customers their food. Some nights, I’d make $200 or even $300. Other nights, I’d make half that, or less. The pandemic was especially rough. We had no inside dining — just six outside tents, and a lot fewer diners. It was tough to pay bills for a couple of years.
I got married to a coworker I met on the job, and before leaving the dining room, we had two kids. I had to bring home the bacon, but it was hard to estimate how much I’d make in a given year. And every year, come April 15th, I had a choice to make. Would I report my tip income on my taxes? Or would I keep it off the books and keep more money in my pocket?
I always made the lawful choice. But it was tough. The Census Bureau estimates that about a third of tipped income went unreported between 2005 and 2018 — about $8 billion a year. I don’t support it, but I understand it. A lot of my coworkers were just starting their careers or had young families. They had a strong incentive to make a bad choice.
But this year is different. Thanks to the tax-cut bill that President Donald Trump signed last year, most tipped income up to $25,000 isn’t subject to federal taxes for the 2025 through 2028 filing years. There’s much less reason for tipped workers to hide a big part of their income from the government. It’s a win for working families and the rule of law. Not only do families legally keep more money in their pocket, but with higher reported incomes, it’s easier to qualify for the credit they need to buy a car or a first home.
But the job’s not done. States still have the power to levy taxes on tips, and just over half do. So long as the government is grabbing for this money, tipped workers still have a reason to hide much of their income. It would be better for everyone if all states followed President Trump’s lead.
Some have shown common sense. Seven states automatically follow federal policy, so when the federal taxes ended, theirs did, too. Several others have proactively changed their policies. Notably, the list includes Michigan Gov. Gretchen Whitmer, who signed a no-tax-on-tips law in October. As a Democrat with likely hopes for higher office, her support of a tax cut is refreshing indeed.
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But other blue-state governors — including my own — show no signs of giving workers relief. Gov. Janet Mills has called on the Maine legislature to conform state law to most of what’s in the federal tax-cut law, but she excluded no taxes on tips. Fiscally, that makes little sense. Maine would lose an estimated $9.2 million in annual tax revenue, a drop in the bucket in a state that spends $14.5 billion a year.
Yet while the numbers are minor for state revenue, they’re major for tipped workers. Every dollar they pay to Augusta is a dollar they can’t spend on their families and futures. Continued taxation isn’t just politicians thumbing their noses at the Trump administration. They’re giving a middle finger to workers who want and need relief.
Gov. Mills isn’t the only one sending that ugly signal. In January, Arizona Gov. Katie Hobbs vetoed a bill to conform state policy with federal law. Bizarrely, she announced her veto flanked by signs that read "middle class tax cuts now." Wisconsin Republicans sent a similar bill to Gov. Tony Evers shortly after the start of the year. He hasn’t indicated what he’ll do, but given his general opposition to state Republicans, a veto seems likely any day.
I wish more governors and state lawmakers — Republicans as well as Democrats — would see the light across the country. Ending taxes on tips won’t help me anymore, but it would help millions of workers dealing with the legacy of inflation and a consumer-spending slowdown. President Trump has done his part to deliver for tipped workers. Now state leaders should stop stiffing them.