Virginia Governor Glenn Youngkin proposes to stop taxing service tips, potentially increasing paychecks for many workers and offering political advantages at a time when other Republican leaders are backing similar efforts.
Key Facts:
– Gov. Youngkin’s plan would exempt service tips from Virginia’s state income tax.
– State officials estimate it would return about $70 million annually to Virginia residents.
– More than 250,000 Virginians in industries like food service, beauty, and hospitality could see higher take-home pay.
– Federal-level proposals vary, with some Republican lawmakers looking to exempt tips from income taxes only, while others include payroll taxes.
– A Bankrate survey suggests that Americans’ attitude toward tipping has grown more negative, with fewer people always leaving a tip.
The Rest of The Story:
Youngkin’s proposal aims to shift how state taxes treat service tips, allowing workers who rely heavily on gratuities to deduct those amounts from their taxable income at the state level.
By doing so, the governor hopes to boost local economies and help workers who often rely on unpredictable streams of income.
His plan comes at a time when several Republican lawmakers, including Sen. Ted Cruz (R-Texas) and Rep. Byron Donalds (R-Fla.), are considering their own versions of tip-related tax relief.
Opponents or skeptics could point out that many tipped workers already owe little to no federal income tax, and that shifting opinions on tipping culture may influence how beneficial such reforms are in the long term.
Still, Youngkin’s move stands out as a straightforward push to help these workers keep more of their earnings.
I'll sign every receipt just like this until I sign No Tax on Tips into law. pic.twitter.com/ekhbhDAx0p
— Glenn Youngkin (@GlennYoungkin) December 16, 2024
Commentary:
Removing taxes on tips at the state level makes good sense, as it gives those who earn the least a direct boost.
For Virginia’s service workers, it creates a fairer system that rewards effort, while at the same time helping local communities.
This kind of policy shows that government can step in to reduce unnecessary burdens without complicating the tax code.
From a political standpoint, this is a smart move by Youngkin.
It aligns with a conservative principle of letting hardworking people keep more of their own money, and it may inspire other governors to follow suit.
The Bottom Line:
Virginia’s no-tax-on-tips proposal could offer meaningful financial relief for thousands of workers and serve as a template for other states.
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In a climate of changing attitudes toward tipping, this approach could bring more stability to those who depend on it.