California, a blue state, has decided against adopting President Trump’s “tipping tax exemption.” However, many servers and bartenders in the state don’t seem to support this decision.
“Without taxes, I’d see more money in my pocket,” remarked Alex Frost, a bartender at Baja Cantina in Marina del Rey. He expressed his confusion about the reasoning behind California’s high tax rates. Although he didn’t vote for Trump, he still supports the One Big Beautiful bill’s provision for a “tip tax exemption,” which offers federal tax deductions on tips and overtime. He believes these tax breaks could provide much-needed relief in a state known for its high cost of living.
“Most people in this field are drawn to it because of tips… Just being able to deduct part of those would be a significant help,” Frost noted.
California isn’t alone in opting out of federal tax policy; states like Illinois and New York have made similar decisions, meaning that tips will continue to be taxed under state law.
The federal tax cut for tips is a featured aspect of Trump’s One Big Beautiful Act, allowing various service workers to potentially claim up to $25,000 in federal income tax credits until 2028. Some states are aligning their tax rules to accommodate this, but California is facing its own financial struggles, with estimates suggesting the tip tax credits could cost the state $3.2 billion. Left-leaning lawmakers appear hesitant to amend leave policies for service workers.
“It’s disheartening that California, a state that emphasizes support for working people, isn’t adopting a tax break on tips,” said Joel Dixon, president of Rustic Canyon Family in Santa Monica. “This was a straightforward way to help tipped workers and small businesses, yet it seems like the concerns of everyday workers are being overlooked.”
The office of Gov. Gavin Newsom stated that altering the taxation of tips would necessitate changes to state laws. According to spokesperson Brandon Richards, “Most Californians pay less in total taxes compared to states like Texas and Florida, while benefiting from a higher minimum wage that exceeds Trump’s $7.25 an hour.”
Some service industry workers shared their thoughts with reporters, acknowledging the benefits of California’s high minimum wage but simultaneously expressing a preference for adopting the federal tipping regulations.
Everett Brenzza, a barback at Elefante in Santa Monica, who moved from Boston recently, noted the steep rise in living costs. “Gas prices have nearly doubled,” he said. “It would certainly be better if some of our tips were exempt from taxes, but I am thankful that I can just manage to get by here.”
Chris Elsenbroek described the tax policy as a “cobblestone mix,” emphasizing a larger concern. “I worry this diverts attention from the crucial debate about taxation fairness,” he stated, pointing out that while minimum wage workers face financial difficulties, wealthy individuals often don’t pay their fair share.
Wayne Blasingame, owner of nine Los Angeles restaurants, expressed skepticism regarding the idea of not taxing tips, suggesting it could paint the industry negatively. However, he believes that, since it is now federal law, it should be implemented at the state level too. “Employees in the industry would greatly benefit, and I’d be happy for them,” he noted.
