Kelly Loeffler, the 28th Administrator of the U.S. Small Business Administration, announced on social media platform X that the "One Big Beautiful Bill" would provide tax cuts and eliminate taxes on tips or overtime to encourage hiring and investment on Main Street.
"The One Big Beautiful Bill is a SMALL BUSINESS bill," said Loeffler. "Historic tax cuts, Made in America expensing, and no tax on tips or overtime - the perfect recipe to unleash hiring, growth, and investment on Main Street. Making Main Street Great Again."
The Internal Revenue Service (IRS) mandates that all tips received by employees be reported as taxable income. This requirement encompasses cash tips, credit card payments, and amounts from tip pools. Employees must report tips totaling $20 or more in a month to their employer by the 10th day of the following month. These tips are subject to federal income tax, Social Security tax, and Medicare tax.
A survey conducted in 2021 by the Pew Research Center revealed that 16% of Americans have earned income through online gig platforms. Among these gig workers, 58% said that their earnings were essential or important for meeting basic needs. These findings highlight the financial reliance many individuals have on gig work.
According to the U.S. Bureau of Labor Statistics, as of May 2023, the median hourly wage for waiters and waitresses, including tips, was $14.00. In certain states, tipped employees may earn a base wage as low as $2.13 per hour, with tips compensating for the difference to meet the federal minimum wage. Consequently, tipping policies significantly impact total earnings for numerous service workers.
Loeffler is currently serving as the Administrator of the U.S. Small Business Administration and advocates for policies supporting small businesses and Main Street growth. She previously held office as a U.S. Senator for Georgia and has experience in business leadership.