Some service industry workers in Rockport are expressing concerns that President Trump's "No Tax on Tips" act may not be as beneficial for them as it initially appears. The "No Tax on Tips" act, part of President Trump's "One Big Beautiful Bill" signed on July 4, 2025, introduces a federal income tax deduction for reported cash tips up to $25,000 per year. However, local service industry workers in the Coastal Bend point out several limitations that they say, could reduce its effectiveness.
"On the surface, it does sound great, no tax on tips sounds like an excellent idea, but you really do have to look deeper than that," said Kate White, a bartender in Rockport.
White explained her concerns about the act's several restrictions: it only applies to reported cash tips up to $25,000 annually per person, and it is set to expire in 2028.
"There's also gonna be a lot of tipped employees that don't understand that you do still have to claim these cash tips," White said.
Another concern White raised involves how service workers typically file their taxes. When asked if she usually opts for the standard deduction when filing taxes or itemizes, White responded: "I opt for the standard. And that's another great point, is that when you are gonna do this no tax plan there, you're not gonna be able to get the standard deduction anymore."
White believes that service workers itemizing their cash tips when filing taxes will ultimately result in financial losses.
Juleanna Sanchez, a barista at Quirky Bird Coffee in Rockport, is trying to remain optimistic about the new policy.
"As someone that relies on tips heavily, I was like oh, that's great. You know, I don't have to anticipate that chunk that gets taken out," Sanchez said.
However, she acknowledges what she calls the "fine print" of the act.
"There may be some benefit, but I know that people that work, in kind-of, maybe the lower end of the service industry, it's not as great as it seems," Sanchez said.
The "No Tax on Tips" act applies to all qualifying tip earnings for the entire 2025 tax year.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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