President Donald Trump’s suggestion to exempt tips from taxes struck a chord with many last year. It’s a relatable idea, especially for those grappling with rising expenses and trying to get ahead.
However, as Congress considers this proposal, there’s a significant group that could be overlooked. Millions of daily tips are earned by workers who deliver food and groceries.
Interestingly, the current law regarding tax-free tips only benefits certain employees, like restaurant servers. This means it might exclude independent contractors, such as delivery drivers, on whom many people rely every day.
Take Mariki, for instance, a mother of three in Florida. She uses her earnings from DoorDash to support her son’s diabetes care. Or look at Joe, a retired father in Wisconsin, who started delivering to help cover college expenses for his kids amid rising living costs.
They’re not alone; more than 7 million Americans work as independent contractors in the app-based economy. Many people rely on these platforms for flexible income. A recent Senate report found that about one in three Americans engage in some form of independent work, indicating it’s a significant segment of the workforce.
For individuals like Mariki and Joe, this work model offers them control over their schedules. They get to be their own bosses and can adapt their work hours to fit their lives. Plus, they keep all their earnings. That extra cash often goes directly to essential expenses like rent, gas, and groceries. Removing taxes on these tips could really help them reach their goals.
Let’s be clear: a $5 tip for a restaurant server isn’t fundamentally different from a $5 tip for a delivery driver. Both signify appreciation for service and support workers in achieving their financial aims. Tax laws should reflect this equality.
In 2022, the distribution and ride-sharing sector contributed an estimated $212 billion to the U.S. economy, a figure that could grow to $500 billion in the next decade. This is a crucial and expanding part of our economic landscape that lawmakers should consider.
This issue extends beyond taxes; it’s also about the future of independent work and the benefits these workers require. One emerging idea involves a new program to offer benefits like healthcare, paid leave, and retirement savings for those moving between jobs. Pilots for this initiative have received bipartisan support in Pennsylvania and Georgia, with new proposals currently in Congress.
Yet, there’s no need to wait until a comprehensive system is in place to do what’s right. Congress can act now to make tax policy more inclusive.
This is why we advocate for app-based workers. Through initiatives like the Dash route Advocacy Network, numerous individuals have reached out to their representatives, asking for change. These are everyday voices that deserve to be heard.
Lawmakers from both parties claim they want to support the American public. Including all tipped workers in this tax break is a tangible way to fulfill that promise.
It’s essential to ensure that those who receive tips every day get the fair treatment they’ve earned.
