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(WTAQ-WLUK) — A proposal to eliminate the state income tax on tips is moving forward in Madison.
Assembly Bill 38 passed the Wisconsin State Assembly Thursday and now moves to the Senate.
The idea of removing state tax on tips has servers and bartenders ecstatic. One server at Stadium View in Ashwaubenon said this change is long overdue.
“It’s kind of everything. Like genuinely, that’s how we make our money,” server Natalie Reeb said.
Reeb believes taxing tips is unfair since they’re based on performance outside the regular paycheck.
Legislation to eliminate taxes on those hard-earned tips could be life-changing for people in the service industry.
“This is our main source of income for a lot of people here, and we do have families, everything else we have to provide for. So, taking that into consideration, it would be really awesome to get money back,” Reeb said.
If Gov. Tony Evers signs the bill into law, up to $25,000 on all tips will be exempt from state income taxes. This change would apply to people earning under $150,000 annually as a single taxpayer or under $300,000 annually as a joint taxpayer.
“I think it sends a message that their service is valued. That it is something that when somebody is giving something freely, as a gift, that it’s not something that the government is going to stick their hand in and take a portion of,” State Sen. Andre Jacque, R-New Franken, said.
Jacque co-sponsored the bill. He and other Wisconsin Republicans believe this is a meaningful way to help low and middle-class workers.
“This extra money could really help them out in a big way, and we really owe them. We owe them something, because inflation was such a mistake, such an unnecessary mistake,” State Rep. Ron Tusler, R-Harrison, said.
Tusler co-authored the bill. He said it needs to be signed into law as soon as possible so workers can apply it to their 2025 taxes.
The bill passed 61-33 in the State Assembly Thursday, with only Democrats voting against it.
State Sen. Jamie Wall, D-Green Bay, said he plans to vote yes on the bill, but wants to see more done to help help low income families.
“I’m in favor of putting more money in the pockets of people who work for a living, but I wouldn’t stop there. I mean, we should raise some minimum wage. We should make it easier to build housing, so people can afford that first mortgage,” Wall said.
The bill is expected to be on the Senate floor Jan. 21. Both Jacque and Tusler believe Evers will sign the bill into law, though Wall is unsure.
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