DoorDash backs Hochul plan to eliminate state income taxes on tips

DoorDash is pushing New York's tip-tax proposal as a way to help Dashers keep more of what they earn, and the pitch lands squarely in the labor market Pizza Hut competes in every day. On May 4, DoorDash said it strongly supports Governor Kathy Hochul’s plan to eliminate state income taxes on tips, a move that would apply to up to $25,000 of tipped income in tax year 2026.

Hochul first laid out the proposal on January 1, 2026, and later folded it into her January State of the State and FY2027 budget rollout in Albany. Under the state plan, the benefit would begin when New Yorkers file 2026 returns. State materials tied the tip-tax change to a broader affordability package that also covered child care, utilities, rent, insurance and food assistance, while the New York State Society of CPAs flagged the proposal early in the year as potentially important for hospitality, service and delivery employers.

DoorDash is not treating the issue as a narrow tax break. The company has framed “No Tax on Tips” as a broader win for independent workers and delivery couriers, and has said the federal version is already saving Dashers hundreds of millions of dollars on their federal returns. It also highlighted Sharon Simmons, a Dasher from Arkansas, in a White House delivery promotion. DoorDash said Simmons started dashing in 2022 and has completed more than 14,000 deliveries, a reminder of how aggressively the company is using real worker stories to sell the policy.

For Pizza Hut, the stakes go beyond politics. Delivery pay is already a mix of hourly wages, mileage, shifts, tips and customer habits, and Pizza Hut’s own customer terms make clear that discounts do not apply to tax, the delivery charge or the driver tip. That means tipping still sits at the center of what drivers actually take home, and any tax change that makes tips feel more valuable could reshape how drivers compare Pizza Hut with DoorDash, Uber Eats and other gig options.

Federal rules are moving at the same time. Treasury and the Internal Revenue Service issued guidance in November 2025, then final regulations on April 10, 2026, on occupations that customarily and regularly receive tips. The federal deduction is temporary for tax years 2025 through 2028, capped at $25,000 a year, and phases out for higher-income taxpayers. IRS guidance says about 6 million workers report tipped wages.

For Pizza Hut managers, that is the real pressure point. If New York and Washington keep giving tips more favorable treatment, delivery work may become easier to recruit into on one side of the market and harder to hold on the other, especially in stores already trying to balance in-house drivers against third-party apps.