Measure modeled after federal legislation responding to Trump agenda item
BY: TIM CARPENTER
Kansas Reflector
TOPEKA — State and federal lawmakers from Kansas convened Monday at the Celtic Fox pub to celebrate legislation to exempt tipped earnings of service and hospitality workers from income taxation.
The approach at the state level would be modeled after congressional bills promoted by President Donald Trump that ditch the federal income tax on tips received by restaurant workers, servers, valets as well as bellhops, bartenders or caddies.
Kansas Senate President Ty Masterson and state Sen. Caryn Tyson joined U.S. Sen. Roger Marshall, also a Republican, at the pub to talk about ending taxation of tips received in the form of cash, debits or credit cards.
“The intention is to take tax off tips in Kansas,” said Masterson, of Andover. “We love that idea from the federal government. Gratuity is gratitude, right? It’s not ordinary income to somebody.”
Tyson, the Parker chair of the Senate Assessment and Taxation Committee, said matching state law to federal reform made sense. She estimated the reduction in state tax revenue could range from $4 million to $10 million annually.
“It helps simplify the tax code,” she said. “We need to help those in need, and we did that last year with legislation that we passed, especially exempting state income tax from Social Security. I look forward to getting this passed.”
Marshall, an ally of Trump in Washington, D.C., said the federal tipped-income bill should be regarded as a vehicle for making Kansas affordable again. He said the federal measure — likely to pass Congress sometime between March and June — was part of Trump’s broader strategy to promote domestic prosperity and security.
“What he’s done from the security standpoint is very self-evident on his impetus to control the border and get the illegal criminal aliens out of this country,” the U.S. senator said. “We’re here today to talk about the prosperity part of this.”
He said the federal tipped income initiative was one piece of an effort to lend a hand to hard-working taxpayers.
Overall, he said, the congressional priority in 2025 would be renewal of federal tax cuts initiated during Trump’s first term. He also said Congress and the president should consider ending the federal income tax on Social Security income.
“And, how about no taxes on overtime?” Marshall said.
The nonprofit Committee for a Responsible Federal Budget estimated enactment of a federal exemption on tips would cost $150 billion to $250 billion over a 10-year period. The organization indicated the exemption could prompt employers and employees to reclassify ordinary income as tips to avoid paying federal income taxes.
A pending bill in the U.S. Senate would incluce a yearly $25,000 deduction cap as well as occupational limits to the exemption. The U.S. House version would limit the tipped-income exclusion from federal taxes to $20,000 annually.