Kansas Republican Senators announced a new bill proposal that would make tips made from the serving and hospitality industries exempt from income taxation. Ty Materson, Kansas State President and state Sen. Caryn Tyson met with U.S. Sen. Roger Marshall to discuss ending the taxation of tips received in cash, debits or credit cards.
It is predicted that state tax revenue would decrease anywhere from $4 million to $10 million with the proposed cut. While the bill would be beneficial to high school students who work in the service or hospitality industry, the nonprofit Committee for a Responsible Federal Budget estimates that the tax exemption “would cost $150 billion to $250 billion over a 10-year period.” There is also a risk of employers or employees reclassifying regular income as tips to avoid paying federal income taxes.
