For eight years, the clatter of plates and the murmur of conversations filled my days. I worked as a server in a Maine hotel, navigating crowded tables and balancing trays, all for tips. Some nights were bountiful, bringing in $200 or $300, while others barely covered half that amount, a constant uncertainty hanging over each shift.
The pandemic brought a new level of hardship. Dining rooms emptied, replaced by a handful of outdoor tents, and the flow of customers dwindled to a trickle. Paying bills became a relentless struggle, stretching on for two long years. Yet, amidst the uncertainty, life continued.
I met my husband, a coworker, within those restaurant walls, and together we started a family, welcoming two children into the world. The responsibility of providing for them weighed heavily, especially with an income that fluctuated so wildly. Each April, a difficult decision loomed: honestly report my tip income, or risk keeping more money but bending the law?
I always chose to report everything, but it wasn’t easy. I knew I wasn’t alone. Estimates suggest billions of dollars in tipped income goes unreported annually, a reflection of desperation and the pressures faced by those living paycheck to paycheck. It’s a choice born of necessity, not malice.
This year, however, feels different. A recent tax law change offers a significant reprieve, shielding most tipped income up to $25,000 from federal taxes for several years. This dramatically reduces the incentive to hide earnings, a genuine benefit for working families and a step towards greater financial transparency.
The impact extends beyond simply keeping more money in hand. Higher reported incomes make it easier for families to qualify for loans, opening doors to opportunities like purchasing a car or a home – milestones that often feel out of reach. It’s a tangible boost to financial stability.
But the fight isn’t over. States retain the power to tax tips, and a majority still do. As long as governments seek a share of this income, the temptation to conceal it will persist. A nationwide adoption of the federal policy would be a true victory for tipped workers.
Progress is being made. Several states automatically align with federal tax policies, and others have proactively changed their laws. Even Michigan’s Governor, a Democrat, recently signed legislation eliminating taxes on tips, a surprisingly bipartisan move.
Unfortunately, not all states are following suit. In Maine, despite a call to align state law with the federal changes, the governor excluded the elimination of taxes on tips. The potential revenue loss to the state is minimal, a small fraction of the overall budget, yet the impact on workers is substantial.
Each dollar taxed is a dollar lost for families, a dollar that could be spent on necessities or saved for the future. Continuing to tax tips feels less like sound fiscal policy and more like a deliberate burden on those who can least afford it.
Arizona’s governor recently vetoed a similar bill, ironically announcing the decision surrounded by signs promoting “middle class tax cuts.” In Wisconsin, a bill faces a likely veto from the governor, continuing a pattern of resistance to policies that would benefit tipped workers.
I no longer work for tips, but I see the potential for positive change. Millions of workers are still grappling with inflation and economic uncertainty. President Trump initiated a crucial step forward, and now it’s up to state leaders to finish the job, to stop penalizing those who rely on the generosity of others to make a living.
