President Donald Trump's 'Big, Beautiful, Bill' includes a "no tax on tips" provision that is expected to increase the net wages of workers in jobs that rely heavily on tips.
The provision doesn't fully eliminate the tax on tips but allows up to a $25,000 deduction of tips from federal taxes. The tax break is available through 2028.
Exactly how this will work and who will be eligible remains unclear, but Glenn Mills at the Maine Department of Labor said it could make tipping jobs more attractive.
"It could incentivize some people to want to be in those occupations, because they will be able to keep more of their earnings, so that that certainly creates an obvious incentive for people to be in those occupations, or to stay in those occupations, more so than under the current regime," he said.
Mills said the option to tip has appeared in more industries over the last few years.
"That's a relatively new practice that we didn't see probably much before the pandemic. How many people are tipping in those situations, what the level of tips are, and all those sorts of things, and then the sharing of tips among staff is really unclear to us," he said.
Mills said nearly 12,000 Mainers worked as waiters and bartenders in 2024, occupations where tips are common. The minimum direct service wage for the state is $7.33 but Mills said, with tips, the average wage is closer to $25 an hour.
