Culinary Union Rallies Hundreds of Tipped Workers for No Taxes on Tips Push

Congressman Steven Horsford took a seat at the front of a Culinary Union Local 226 meeting room in Las Vegas on March 31 as hundreds of servers, bartenders, and casino workers prepared to tell him what a tax deadline means at shift's end. The number they kept returning to: a restaurant server in the 22% tax bracket who makes $20,000 in tips saves $4,400 in federal income taxes under a deduction set to vanish in 2028 if Congress does nothing.

The rally drew casino, hotel, restaurant, and bar employees alongside Horsford and state Assemblymember Linda Hunt, who heard worker testimony about how proposed regulatory changes could erode take-home pay for a workforce where gratuities typically represent the majority of income.

The deduction, part of legislation enacted in July 2025, exempts tipped income up to $25,000 from federal taxes if the worker's adjusted gross income stays below $150,000 for single filers, and runs through tax year 2028. For a server clearing $400 a week in tips, that amounts to roughly $88 a week no longer owed at filing time. The savings arrive as a tax refund, not a bigger Friday paycheck, unless the worker adjusts their W-4 withholding in advance.

And the relief stops there. Despite the "No Tax on Tips" label, the tip deduction does not eliminate all taxes on tips. Tips remain subject to Social Security, Medicare, state, and local payroll taxes. That same $400 in weekly tips still carries a $30.60 FICA obligation on the employee side, no matter how large the income tax deduction.

The Culinary Union's demands pushed further than preserving an existing break. Union leaders urged Horsford and Hunt to pursue permanent status for the deduction, stronger enforcement against employers who misappropriate from tip pools, and reform of the federal tip credit, which allows certain employers to pay tipped workers a sub-minimum cash wage.

There is a longer-term exposure workers rarely discuss until they need a lease or a car loan: underreporting tips to reduce current withholding shrinks the documented income that banks and landlords use for verification. If tips are not reported, workers not only lose the deduction but also risk IRS penalties for failing to disclose income. A server who pockets tips off the books may limit their tax burden today but find themselves unable to qualify for an apartment or mortgage when a pay stub alone is not enough.

More than 3.5 million tax returns claimed the deduction by early March 2026, delivering an average $1,300 tax cut per filer. With that benefit expiring after 2028 and no permanent replacement in place, the pressure on Horsford to move legislation before the sunset is no longer theoretical.