Missouri Restaurant Association appreciative of new no-tax-on tips law, hopes it goes further in the future

(Missourinet) – The Missouri Restaurant Association calls the new “no tax on tips” law, recently signed as part of President Trump’s budget bill, a win for the state’s 230,000 hospitality workers.

Buddy Lahl, CEO of the Missouri Restaurant Association, told Missourinet, it will be helpful to those that are tipped.

“So, when they file their taxes, they won’t have to pay federal income tax on up to $25,000 of their tips,” said Lahl.

“That’s going to be helpful for that group of folks. The people that work a part time job that only have $10,000 in tips, they’re probably not even in a tax bracket where they’re paying much federal income tax, but as you start to get a little higher up in your income, then it will definitely start to have an impact.”

While the Missouri Restaurant Association is appreciative of the new no tax on tips law, they hope it will go further in the future.

Lahl, said it’s great if you’re on tips because it’s obviously more money in your pocket when it comes tax time, but the bill changed in the House to the Senate to being a tax rebate.

“The way it was originally done was I thought they were going to eliminate the tax on the tips on your paycheck, which would have put more money in your pocket each week as you went along,” said Lahl.

“And it is what it is. I’m going to sound contradictory here as much as we think this is a great thing, it didn’t help my cooks and my dishwashers because they’re the non-tipped employees. So, we gave a tax cut to what is generally our highest paid employee, on the tip side.”

Lahl estimates servers working full-time in a busy restaurant in Kansas City or St. Louis make anywhere from 80-100 thousand dollars per year with over half coming from tips.

Lahl, said there were also a couple of other things that were in that bill including the discounted meal.

“They took it from 50% to 100%, said Lahl. “Employers can get tax relief on any meals they provide for their employees. And then the no tax on overtime, anybody in the hospitality industries that work in overtime, they won’t have to pay taxes on their first $12,500.”

The law is temporary and is set to expire on December 31, 2028, unless renewed by Congress.