New York Lawmakers Remain Silent on Tax Relief for Service Workers
Governor Kathy Hochul and Democratic lawmakers in New York have chosen not to extend the federal “tip-free” policy to state income taxes, which significantly impacts bartenders and restaurant workers amidst ongoing discussions about affordability in the state.
Leon Gallagher, a 30-year-old bartender at The Blasket, expressed his frustration over this lack of action, stating, “He’s a terrible guy,” referring to Hochul. He emphasized how tax-free tips could alleviate financial pressure on workers. “If tips weren’t taxed, you’d save more, enjoy life a little more, and maybe you wouldn’t have to work extra shifts,” he lamented.
The federal tax exemptions put forth by President Trump, considered beneficial for service workers, allowed eligible individuals to deduct up to $12,500 a year in tip income and an equal amount in overtime pay. This deduction is particularly crucial for those who depend on tips for a significant portion of their income, such as those in the hospitality sector.
However, while many states have responded positively to these changes by adopting similar policies, New York has not followed suit, leaving workers in the service industry feeling neglected. Zoe Kalodimos, a waitress in Bethpage, articulated the discontent, stating, “It’s a disgrace. People are living on tips.” She noted losing around $1,000 a month to taxes on tips, which is particularly hard to swallow with the rising costs of living.
Former manager Jackie Putre echoed these sentiments, questioning the lawmakers’ priorities. “They’re involved in everything, and at the end of the day, they’re doing some good, but then the states come and screw you. It’s like, what are we doing?” she remarked, expressing her frustrations as a Trump supporter.
Some workers have also mentioned the shift in tipping practices. With the decline of cash tips, David Aju, a clerk at Anatoly 56 Greek Taverna, said, “Most of the tips come from credit cards, so everything ends up being taxed,” which compounds the burden on them. “Honestly, if my check turns out good and a lot of taxes are taken, that’s bad for us,” he added.
Hannah Thiel, who owns a bar in Williamsburg, pointed out that high taxes significantly reduce what she can actually take home. “How can you survive on $40,000 in New York City? No way!” she exclaimed, highlighting the struggles many face with financial stability.
The notion of affordability has become a central issue for Democrats, particularly with the recent election of Brooklyn’s new mayor, Zoran Mamdani. Hochul has promoted initiatives like “inflation refund checks,” although critics point out that she has not pushed for the extension of federal tip and overtime deductions, even as similar legislation has been proposed.
Uncertainty looms regarding whether the mayor will advocate for relief targeting dependent workers. Meanwhile, a spokesperson for the city suggested that discussions are ongoing, but a decision remains to be seen in the new year.
Some service workers, like Tatiana Cruz, remain hopeful but acknowledge the difficulties of being taxed on their tips. “I think all restaurants should pay their servers a living wage so they don’t have to rely on tips,” she stated, revealing a common desire for reform within the industry.
Restaurant owners share the concerns of employees, noting the potential benefits of tax breaks. John Winterman, owner of Francie Restaurant in Williamsburg, suggested that helping restaurants with tax relief could improve the overall situation for workers. Sammy Musovich, another restaurant owner, warned that without a tax exemption, his staff might consider leaving New York City altogether.
The inaction has drawn criticism from various corners. Trump’s former Treasury Secretary condemned the lack of response from New York as a form of “political obstruction,” while Republican gubernatorial candidate Bruce Blakeman pointed out the financial burdens this choice imposes on the service industry. “Kathy Hochul has stuck with the service industry by blocking substantial tax breaks on tips and overtime,” he stated.
A spokesperson for Hochul has suggested an openness to reevaluating the tax situation for tips and overtime, acknowledging ongoing discussions about potential reforms in the upcoming budget. Whether these talks will yield tangible benefits for workers remains uncertain.
