waitress holding check
Arizona Legislature Fast-Tracking Bill To Exempt Taxes On Tips

January 26, 2025

By Daniel Stefanski |

The State of Arizona is fast-tracking a tax reduction policy through the legislature that became a staple of President Donald J. Trump’s campaign platform over the past year.

This week, the Arizona House of Representatives Committee on Ways and Means passed HB 2081, which would exempt taxation on tipped wages from the state’s individual income tax.

State Representative Gail Griffin, a Republican who was the sponsor of this legislation, said, “I worked in the service industry years ago and understand the challenges tipped employees face. Tips are an expression of appreciation from customers for services provided. Tips are gifts and, in my opinion, should not be taxed. HB 2081 ensures that Arizonans who rely on tips to support themselves and their families can keep more of their hard-earned money. I’m grateful to Chairman Olson for making this the committee’s first bill for the session.”

Another Republican lawmaker, State Representative Neal Carter, added, “A key feature of a good taxation system is voluntary compliance and simplicity of administration. Tips are often paid in real time and in strange amounts. Taxing tips simply punishes the honest because strict compliance is difficult to achieve.”

As a candidate for President, Trump announced his plan for no federal taxes on tips back in June in the State of Nevada. Shortly after Trump’s announcement last summer, his Democrat opponent, then-Vice President Kamala Harris, mirrored his proposal in an attempt to woo voters on the campaign stump. On Inauguration Day this week, the newly minted Commander in Chief riffed that he thought his campaign may have secured the State of Nevada’s electoral votes in the November General Election because of that promise.

A poll from The Associated Press-NORC Center for Public Affairs Research earlier this month showed that 54% of respondents would strongly or somewhat favor eliminating taxes on earnings from tips.

The U.S. Bureau of Labor Statistics estimates that there are 2,277,900 waiters and waitresses across the country.

The bill passed the Arizona House committee along a party-line vote – 5-3, with one Democrat member absent.

According to the Arizona Legislature’s Request to Speak system, representatives from the Republican Liberty Caucus of Arizona, Arizona Licensed Beverage Association, and Fraternal Order of Police AZ State Lodge, signed in to support the bill. Representatives from Living United for Change in Arizona, the Arizona Center for Economic Progress, and Rural Arizona Action opposed the legislation.

HB 2081 will soon make its way to the floor of the Arizona House of Representatives for a vote from the full chamber.

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

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