Ohio lawmakers push to remove taxes on tips

COLUMBUS, Ohio (WCMH) — A new idea for tax cuts has been proposed at the Ohio Statehouse that would impact more than half a million Ohioans.

“These aren’t people getting rich. These aren’t millionaires. These are blue collar people that are trying to get by,” Rep. Jay Edwards (R-Nelsonville) said.

Edwards is sponsoring House Bill 643. Right now, when you open the bill, it only has one sentence that reads, “The General Assembly declares its intent to exempt tips and gratuities from income tax.”

“We’re still working on the legislation now,” Edwards said. “So, you know, once we get this bill on the committee, we’ll substitute it right away and have the actual language.”

The actual language likely will not be added until at least November, when the legislature reconvenes after summer recess. But Edwards said the idea is simple: to help the working class by letting tipped workers keep their gratuities in full.

“They’ve got children. They’re trying to pay rent. They’re trying to pay off their vehicle. They got insurance on their on their vehicle. They’re struggling to get by,” Edwards said. “So, this is a way for us to be able to help them and try to do that.”

Despite the idea being in its very early stages, the concept is already garnering bipartisan support and the Ohio Restaurant and Hospitality Alliance is getting behind it.

“We’re pretty excited about anything that we can do to help people in this industry move forward,” said John Barker, president of the alliance. “This is an industry that has been under tremendous pressure since the pandemic.”

“I’d be looking to try to make it as broadly based as possible and the more tax relief that we can provide to Ohioans who need it the most, it actually benefits everybody,” Rep. Casey Weinstein (D-Hudson) said. “I dare say it may have bi-partisan support when we take it up.”

The idea is a trickle-down from former President Donald Trump, and now Vice President Kamala Harris, who also floated the idea of eliminated income taxes from tips.

“I think that’s what that’s what makes this exciting is that you have both the people who are running for the White House, you know, paying attention to something like this, which doesn’t always happen, right, to kind of the average person working out at a restaurant or a bar,” Barker said.

But Barker said, “Beyond the big headlines, there’s actually a lot of details you got to dig through.”

“It starts to get really deep, really fast,” he said.

Barker is talking about how this tax elimination might impact state revenue.

“Let’s say you need to take advantage of worker’s comp somewhere,” Barker said. “You don’t want to take so many funds out of that, that there’s not enough workers compensation money to take it to help people when they need that type of thing.”

Barker said those are the kinds of details that they will be looking into as this legislation is crafted. Weinstein agreed.

“Where I get a little bit concerned is potential lost revenue,” Weinstein said. “And then are we also cutting taxes for the wealthiest Ohioans who can afford to pay their fair share? There needs to be some balance there.”

Weinstein said as long as it does not “create a huge dent” revenue and lead to the cut of “critical public services” he sees an overall benefit for Ohio’s economy by allowing tipped workers to keep a little extra cash.

“They’re able to put more [money] back into the economy,” Weinstein said. “They’re able to buy more things for themselves. They’re able to afford more services for themselves. They may be putting that money right back into local, small businesses in their community. So, it creates a virtuous cycle that benefits a lot of people.”

Overall, Edwards said he does not anticipate a big price-tag to pull this off.

“Won’t cost taxpayers a lot of money, but to the to the service worker that’s getting those tips, that could be a big deal for them,” Edwards said.

Barker said right now there are 550,000 people who work in hospitality across Ohio.

The tipped workers in hospitality make $5.25 an hour minimum wage plus tips. Barker said on average a tipped worker in Ohio makes $27 an hour when it is all said and done.

Only Ohioans making over $26,050 pay income taxes — which means only tip earners making above that would be impacted by this proposal — so likely the average earner.

As far as other working-class citizens go, Edwards said it is an ongoing effort to help those Ohioans.

“We fight for working class people every day. This is just one little carve out that I think is important to the service workers,” Edwards said.

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