NJ bill says government shouldn’t touch your tips

People who rely greatly on tips at work shouldn't have to treat that extra money as standard income, according to a newly introduced measure in the New Jersey Legislature.

The proposed law exempts tips from being taxed under New Jersey's gross income tax. Instead, tips would be treated as a "gift," according to a draft of the legislation.

“Taxing tips is like taking credit for someone else’s hard work," said Sen. Vince Polistina, R-Atlantic. "These gratuities are a reward for excellent customer service, and workers deserve to keep their earnings without the government taking a cut."

The bill covers workers such as a restaurant servers, bartenders, casino dealers, hairdressers, and food delivery workers. Right now, tips earned by these workers are considered taxable income under New Jersey law.

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The move is being floated on the national level as well. Both presidential candidates have indicated that they'd be in favor of ending taxes on tips. Federal legislation, which would also eliminate the sub-minimum wage for tipped workers, aims to scrap income taxes on tips.

Polistina said his legislation may gain traction after the presidential election.

"This should be a bi-partisan issue supported by all to provide direct relief to some of our hardest working citizens," Polistina said.

In addition to giving workers the chance to keep more money for themselves and their families, Polistina said the move could also attract more workers to the service industry.

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