Tip Exemptions Have No Place in State Income Tax

Tip Exemptions Have No Place in State Income Tax

Creating a special tax break for tipped income – as at least 20 states are considering this spring – would harm state budgets, encourage tax avoidance, and fail to reach the vast majority of low- and middle-income workers. In fact, a devastating analysis by the Economic Policy Institute (EPI) explains that tip exemptions will hurt more workers than they help. The benefits of a tip exemption would be extremely narrow. Surprisingly few U.S. worker…