Portions of the President’s 2017 tax plan are set to expire this year, bringing tax policy to the fore. Among the President’s proposals is the elimination of federal income taxes on tips (a promise he made on the campaign trail). While this initiative has some appeal (and some bipartisan and industry support), critics suggest that there are better ways to help tipped and other workers. They also point to it being unfair to other categories of employees, e.g., cashiers, who are not tipped. In Wisconsin, Republican lawmakers are preparing renewed legislation on the subject.
Business Takeaway: Should this law take effect, it will have an effect on payroll processing. Keep in mind that there are a number of additional proposals and ideas swirling about relative to employee compensation and benefits, including cutting federal taxes on overtime pay and Social Security benefits. Stay tuned for further developments.