AOC Exposes Catch in “No Tax on Tips” Rule in Trump’s Budget
The no tax on tips provision of Donald Trump’s budget cannot be the pro-labor gift that the president has made it out to be while the rest of the bill slashes health care and other social programs for lower-income people. Representative Alexandria Ocasio-Cortez shed some light as to why that’s the case.
“On this point of tax on tips, as one of the only people in this body who has lived off of tips, I wanna tell you a little bit about the scam of that text, a little bit of the fine print there,” she said on Wednesday. “The cap on that is $25,000—while you’re jacking up taxes on people who make less than $50,00 across the United States while taking away their SNAP, while taking away their Medicaid, while kicking them off of the ACA and their health care extensions.
“So if you’re at home and you’re living off tips, you do the math. Is that worth it to you? Losing all your health care? Not able to feed your babies? Not being able to put a diaper on their bottom, in exchange for what? This bill is a deal with the devil. It explodes our national debt, it militarizes our entire economy, and it strips away health care and basic dignity of the American people for what? To give Elon Musk a tax break and billionaires the greedy taking of our nation? We cannot stand for it, and we will not support it. You should be ashamed.”
AOC: "On this point of tax on tips, as one of the only people in this body who has lived off of tips, I want to tell you a little bit about the scam ... the cap on that is $25,000 while you're jacking up taxes on people who make less than $50,000 across the US ... while kicking… pic.twitter.com/5VrEbJNnHl
— Aaron Rupar (@atrupar) July 2, 2025
It’s hard to be excited about perceived tax cuts—like the no tax on tips provision—when they’re easily outweighed by the costs incurred by cuts to SNAP, Medicaid, and the Affordable Care Act. And furthermore, lower-income people who rely on tips already qualify for the standard tax deduction in federal taxes. The math here only makes a significant difference for higher earners, and makes virtually none at all for those who need it the most. Many of the people this provision is supposed to help are already making below a living wage, which is why tips are so important here in the first place.
The deduction is also only available until 2028.