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(WTAQ-WLUK) — Eliminating state tax on tips and overtime would cost Wisconsin $2.76 billion over a decade according to new analysis by Forward Analytics, a nonpartisan Wisconsin research organization.
The study finds no tax on tips and overtime would essentially be a double-edged sword.
“This is a cost to state revenue, but at the same time is putting money back into the pockets of Wisconsinites to either spend or save as they see fit,” Forward Analytics Research Analyst Jacob Anderson said.
The amount was calculated by estimating how much income tax workers who earn tips and overtime would save over 10 years.
No tax on tips has been a discussion in the Wisconsin Legislature for awhile.
Gov. Tony Evers proposed it in 2025, but vetoed the idea from a Republican-authored bill in April 2026, in search of permanent tax relief.
A retired University of Wisconsin-Madison economics professor said eliminating tax on tips and over time is unfair and is not sensible tax policy.
“Because it leaves other individuals with the same levels of income, but who don’t happen to have over time or don’t happen to have income from tips but just from normal salary, they don’t get a tax break,” UW-Madison Emeritus Prof. of Applied Economics Andrew Reschovsky said.
Reschovsky said if the objective is to provide tax cuts to middle and low class families, the best solution is to change the tax code to lower the tax rate.
He also warns less state revenue would mean cuts to services like education, health care, Medicaid and more.
While eliminating tax on tips and overtime could cost Wisconsin in the long run, servers at restaurants like The Pancake Place in Green Bay said keeping the entirety of their tips would make a huge difference at home.
“It’s pretty important, it’s what we rely on to pay our bills, groceries, stuff like that. We kind of depend on the generosity of our customers,” The Pancake Place server Haleigh Dunks said.
Dunks has been a server at The Pancake Place for about eight years.
She, along with other colleagues would like to see a law change.
While hourly pay is helpful too, tips are what gets servers through the day and make up a large part of their income.
“Anything that we get kind of to add on to our paycheck, even the minimum we appreciate. It helps a lot, especially having to pay less at the end of the year,” Dunks said.
No tax on tips and overtime is expected to remain a hot topic as Wisconsin elects its next governor Nov. 3.
No tax on tips and over time became law at the federal level on July 4, 2025, as part of President Donald Trump’s One Big Beautiful Bill.
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