In the hospitality industry, tips form a significant part of workers' income, with servers and bartenders in restaurants and bars earning 50-70% of their income from tips. Hotel staff, such as bellhops and housekeepers, receive a smaller portion, around 10-20%, while other roles like valet attendants and spa staff see tips contributing 20-40%.

As of 2024, the hospitality sector employs about 16.8 million people in the U.S., with millions relying on tips, including 2.5 million waiters and waitresses and nearly half a million bartenders. Since 1965, the IRS has taxed tips, requiring employees to report them as income and employers to withhold taxes.

Recently, former President Donald Trump, a presumptive presidential candidate of the Republican Party, promised during a rally in Nevada on June 8, 2024, to change federal laws to exempt tip income from taxes for hospitality workers if elected. This potential change could relieve many in the sector from tax burdens and mitigate economic hardships from rising prices. While it is too soon to assume that Trump will reclaim the White House, if he does, taxpayers can expect to see many of the tax provisions included in the 2017 tax cuts extended. Additionally, many other tax incentives would likely be introduced to revitalize the economy.

However, some are skeptical that such a promise would be fulfilled unless Trump reclaims the White House and the Republicans secure a majority in both the Senate and the House.  Additionally, Trump would need to introduce offsetting provisions to balance the budget, as Congress holds the sole authority over tax legislation.