Miami eatery growth attributed to Trump's tax reductions
The One Big Beautiful Bill Act (OBBB), signed into law by President Trump in July 2025, brings significant tax savings to millions of tipped workers across the nation. One of the key provisions of the Act is the "no tax on tips" deduction, which allows independent restaurants and tipped workers to reduce their taxable income by up to $25,000 per year based on their reported tips.
Benefits for Tipped Workers
This deduction can result in substantial savings for tipped workers. For example, in Florida, where the average restaurant server earns around $37,000 annually, more than 60% of which comes from gratuity, this deduction could amount to around $2,000 per year. This reduction in tax liability effectively increases take-home pay for these workers.
The deduction is accessible to a broad range of tipped workers, as it applies regardless of filing status or whether the standard or itemized deduction is selected. The deduction phases out for higher earners, beginning at $150,000 modified adjusted gross income (MAGI) for singles and $300,000 for married couples, disappearing entirely at $400,000 and $550,000 MAGI, respectively.
Benefits for Independent Restaurants
Although the primary effect is on individuals, restaurants benefit indirectly because the provision strengthens the compensation package of tipped employees, which can enhance employee retention and satisfaction. Restaurants that rely heavily on tipped labor may see improved worker morale and reduced turnover costs. This tax break could also encourage better reporting of tip income, potentially increasing transparency and compliance with tax laws.
Additional Provisions
The OBBB Act makes this deduction permanent and part of a broader set of tax reductions, which also include no tax on overtime and other targeted deductions. However, the Act is projected to increase federal deficits by $3.4 trillion over 10 years, which could impact future government spending and policy. Other provisions in the bill focus on seniors and charitable deductions but do not directly affect tipped workers or restaurants.
In Sergio's Restaurants, a family-owned small business, the pro-growth government policies are seen as better equipping the business to create opportunities from the kitchen to the front of house. As a result, Sergio's Restaurants plans to open two new locations and hire approximately 100 new team members due to the Act.
Overall, the One Big Beautiful Bill Act is expected to bring major tax savings to millions of tipped workers nationwide, while also helping to attract and retain talent in the service industry. The Act's benefits extend to employees, customers, and the community.
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