ATLANTA, Ga. (Atlanta News First) - A new push to eliminate federal income tax on tipped wages is gaining traction in Congress. The proposal is drawing concern from restaurant owners and workers across the country and in Georgia, who say the plan could do more harm than good.

Roughly 1 in 10 workers in Georgia are employed in the hospitality and food service industry.

The legislation would allow tipped workers to deduct up to $25,000 in tips from their federal income taxes each year. While supporters claim the plan puts more money in workers’ pockets, critics say it disproportionately benefits high earners, complicates enforcement and could cost the federal government billions in lost revenue.

The Independent Restaurant Coalition, representing more than 500 restaurant owners and workers nationwide, sent a letter to Congressional leadership opposing the bill. A dozen restaurant owners in Georgia signed on.

“No tax on tips sounds like a really great idea,” said Rosa Thurnher, owner of Atlanta restaurants El Ponce, Tiendita and La Palapa. “But a lot of things sound great until you implement policy. A lot of times, the intentions are great, but the design is flawed.”

Thurnher said she would prefer reforms that address how tips are distributed, such as extending tax exemptions to service charges that can be shared among all workers, including back-of-house staff like cooks and dishwashers. Under current federal law, only customer-facing employees are eligible to collect tips, leaving many workers behind.

“Let’s do something that’s a long-lasting solution as opposed to just a campaign slogan,” she added.

According to the Brookings Institution, about 37% of tipped workers earn so little that they already pay no federal income tax.

CPA Jonathan Levens, Partner at Moore Colson’s Tax Practice Area, said if the measure is supposed to benefit low or middle income earners, the bill may not benefit those it’s meant to help.

“If the goal is to support lower- to middle-income taxpayers, there are more effective and targeted options,” Levens said.

Erika Polmar, President of the Independent Restaurant Coalition, said the industry needs consistency, not instability.

“No tax on tips is that it creates an inequity because there are only certain industries that are receiving this benefit. Hair salons, restaurants, but golf course workers and workers in other fields that are traditionally being tipped excluded and that is just going to create more concern over who’s getting a tax credit and who isn’t,” said Polmar.

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