A group in New York state fighting to increase tipped workers' minimum wage plans to fight harder to get the proposal through the Legislature because members argue a provision in President Donald Trump's spending and tax plan that exempts tips from federal income taxes disproportionately benefits high earners.
The provision in the tax reform package Trump signed into law last week is retroactive to Jan. 1 of this year and covers up to $25,000 in tips — a key issue for the president while he was on the campaign trail last year.
It applies to tipped workers like servers, bartenders, busers, delivery workers, nail salon workers, parking attendants and others.
"This is a nonpartisan issue," said Angelo Greco, spokesperson with One Fair Wage. "Republican families, moderate families — they're all suffering from the high cost of rent, high cost of food, from the high cost of living. And we're not asking for much."
The legislation changed federal law by creating a new individual income tax deduction for qualified tips and overtime. It slowly phases out for people earning over $150,000 annually.
Advocates with the One Fair Wage coalition aren't against the no tax on tips policy, but argue two-thirds of tipped workers in the U.S. don’t earn enough to pay income taxes and the new policy won’t apply to them.
Leaders with the coalition Wednesday said any relief will be offset by other cuts to health care and food assistance — adding tipped workers are twice as likely to rely on those programs.
Progressive lawmakers and the coalition have long fought to pass a bill mandating tipped workers earn a full minimum wage with tips on top.
"We're allowing for the restaurant industry to have their customers pay the wages of their workers," Greco said. "No other industry has that be the case.
"...We want restaurant workers to be making a full minimum wage — the same minimum wage that every other worker in New York state is entitled to by law," he added.
But restaurant owners and other leaders in the service industry argue eliminating taxes on tips is only good for some workers while excluding many others who don't earn tips. And they're confused about how the policy would be implemented.
"If you are a non-tipped worker, like a kitchen worker that doesn't earn tips, it's going to further the disparity of wages between the front of the house workers and the back of the house workers, and you're not going to benefit," said Andrew Rigie, executive director of the New York City Hospitality Alliance.
Rigie pushed back on eliminating subminimum wage for tipped workers in the state.
States like California, Oregon and Washington have already eliminated the subminimum wage for tipped workers. Rigie recounted speaking with fellow restaurant owners in those states who say the policy has forced many businesses to shutter.
"It's reduced jobs, it's reduced their income," he said. "Some restaurants have moved away from a tipping system or added complicated surcharges and has created chaos."
The proposal gained traction in Albany in 2023 when the Legislature voted to tie the minimum wage to inflation in the budget that year. Increasing the minimum wage for tipped workers hasn't been included in any state spending plan.
But members of the coalition said the movement is gaining momentum — especially after socialist Assemblyman Zohran Mamdani secured the Democratic nominee for mayor of New York City, which could help the bill gain traction in the Legislature.
"There's a new sense of enthusiasm around the need for living wages and focusing on getting rid of outdated pay structures like the subminimum wage and focusing on economic justice," Greco said.
The no tax on tips provision in Trump's tax reform law is set to expire after 2028, pending an extension by Congress.
While the policy applies to all tips received since Jan. 1, employers are waiting on details from the federal government and state Department of Taxation and Finance about how to fully implement the policy. Restaurants owners said they don't expect the guidance until later this fall.