Both presidential candidates are promoting a policy of 'No Tax on Tips.'
Tyler McBroom explains how this proposal would function and its potential impact if enacted.
Currently, employees must report tips as taxable income for both income tax and a 15% payroll tax.
For instance, a person earning $50,000 annually in tips could boost their take-home pay by nearly $15,000! While the intention is to support lower-income earners, the Yale Budget Lab found that only 5% of the lowest 25% of earners receive tips.