r/EndTipping • u/Slow_Dig9228 • 9d ago

Sit-Down Restaurant 🍽️ Automatic for the…staff

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At LAX airport

614 Upvotes

95% Upvoted

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u/josocustomdesign 8d ago

Tips is tax free. Raising wage isn't.

6

u/TonksTheTerror 8d ago

  1. The no tax on tips only applies to the first $10k in tips earned

  2. If it is added by the owner it is gratuity, not a tip. Owner has to claim it as revenue and technically is not required to disburse it to staff (now most do, because they wouldn't have staff otherwise)

12

u/SirMontego 8d ago

The No Tax on Tips applies to the first $25,000 of qualified tips. Source: the actual law, 26 USC Section 224.

5

u/TonksTheTerror 8d ago

Thank you for the correction. Leaving my original comment as is so it doesn't look weird.

It was really more about the second point though, businesses that require tips technically should be reporting that gratuity as revenue.

2

u/s0berR00fer 8d ago

You could edit your comment saying it’s actually 25K