Wisconsin legislators push to make tips tax-exempt to help benefit the working class

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GREEN BAY, WI (WTAQ-WLUK) — As of this summer, income from tips up to $25,000 will be tax-exempt at the federal level.

Wisconsin legislators are proposing that at the state and local levels too.

“It never should’ve been taxed. We shouldn’t have taxed these folks, and we don’t necessarily need to tax these folks,” said State Rep. Ron Tulser, R-Harrison.

The bill is being proposed to help get more money into the pockets of the working class.

“The folks that we want to help the most as legislators should be the folks that are trying to make that American dream happen. Trying to get themselves up to that financial middle class where they’re independent and they’re feeling comfortable where they’re at,” said Tulser.

“Early jobs for young adults, high school students, people working their way through college, single-income homes, single parents, people working a second job. This is a significant part of that ladder to help people move up through the income system,” said State Sen. André Jacque, R-New Franken.

Although this would lead to less tax revenue for the government, according to the Wisconsin Department of Revenue, the state receives just $33 million per year from tips with a budget of $111 billion.

Employees would still be required to report their tips, which could lead to more accurate reporting.

“Currently, there is kind of a disincentive for accurately reporting tips,” said Jacque.

Some people within the restaurant industry believe this bill would help with the recruitment and retention of service employees.

“We are not at full employment yet since the pandemic in our full-service restaurants. We have fewer employees in our full-service restaurants than what we did in 2020,” said Susan Quam, the Wisconsin Restaurant Association’s executive vice president.

Time will tell for tipped workers in Wisconsin, but they may have extra income on the way.

Before its inclusion in the “Big Beautiful Bill” the U.S. Senate unanimously passed the “No Tax on Tips Act” in May. However, the House has yet to pass the standalone bill.