Nevada Democrats Push Bill to Increase Tipped Workers’ Pay and Tax Relief

LAS VEGAS, Nevada — Nevada Democrats are advocating for legislation aimed at offering greater relief for tipped workers, who often earn as little as $2.13 an hour under federal law. This move comes as part of a broader effort to support workers who rely on gratuities as a significant portion of their income.

The proposed bill, known as the No Tax on Tips Act, was introduced by Nevada Democratic Senators Catherine Cortez Masto and Jacky Rosen, alongside Texas Senator Ted Cruz and other Republican senators. The legislation seeks to abolish federal income taxes on tips, which many argue unfairly diminishes the take-home pay of workers in the food and hospitality industry.

“Just today, I got my paycheck for two weeks and it was only $94,” said Sherie Cummings, a cocktail server at Mandalay Bay Casino and a member of the Culinary Union. “All of it basically went to my taxes, so no tax on tips would be great.” The Culinary Union represents around 60,000 workers in Nevada.

Congressman Steven Horsford, another prominent Nevada Democrat, also supports the initiative and is promoting further relief through his Tipped Income Protection and Support Act, reintroduced on February 13. This legislation aims to eliminate the sub-minimum wage for tipped employees and ensure that tax exemptions on tipped income are not exploited.

“My bill will ensure hard-working Americans never earn poverty wages of $2.13 an hour,” Horsford stated. “It also closes a loophole preventing wealthy parents from evading taxes on gifts to their relatives by claiming those gifts are tips.” Nebraska’s other Democratic representatives, Dina Titus and Susie Lee, have similarly endorsed the legislation.

While the legislation has received support from various lawmakers, the restaurant industry, including the National Restaurant Association, is cautiously backing the proposal to eliminate taxes on tips. However, concerns have been raised regarding a failure to address the sub-minimum wage and the potential for exploitation of the legislation by employers.

The Economic Policy Institute has warned that without measures in place, employers might increase the number of jobs that depend on tips to mitigate labor costs further, affecting workers’ livelihoods even more. Diana Bond, another server in Las Vegas, spoke against the existing wage structure, highlighting her own struggles. “I make $17.79 an hour, but I hardly get a paycheck due to tax compliance. Our tips are our wage, and to be heavily taxed on that is unfair,” Bond noted.

The debate surrounding tipped workers’ wages has intensified under the current administration. During his first term, former President Donald Trump proposed a tip pooling rule that would have allowed employers to share tips with non-tipped staff, a move that drew backlash but was ultimately reversed by the Biden administration in early 2021.

Culinary Union Secretary-Treasurer Ted Pappageorge emphasized the need for comprehensive reform. “Eliminating taxes on tips and ending the $2.13 sub-minimum wage are essential to tackle the high cost of living for working families,” he stated. “It’s outrageous that many companies still pay tipped workers as little as $2.13 an hour.”