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Restaurant owners support tax exemption proposal for employee tips

ROANOKE, Va. – From groceries to gas, we all know that the cost of living is high, and now, Governor Glenn Youngkin wants to do something about it to help. He’s proposing an exemption on tips from someone’s state income taxes if they work in food service, hospitality, or personal service.

“The tips definitely help, and people here at our restaurant are really, really generous,” said Server Simone Windely at Scrambled.

Youngkin made this proposal during his State of the Commonwealth Address this year and during his budget amendments in December.

He said it would help more than 250,000 Virginians in the food service, personal service and hospitality industries.

Scrambled Co-Owner Garry Fleming said on a Saturday night that if someone earns about $200, they’ll save about $10 on their state taxes.

Fleming said his staff would not see much benefit from not including cash tips on their taxes, but he thinks it’s wonderful.

“I think that people who work in the hospitality industry need to be rewarded occasionally. It’s a very hard job, [and] anybody that’s ever been around restaurants, they understand how hard these people work. At the end of the day, they have to be exhausted. So, any little thing they can get. Any little bonus they can get,” said Fleming.

Youngkin is also proposing a car tax relief.

Delegate Jason Ballard said joint filers who make less than $100,000 combined would get a $300 tax credit. Single Filers would get a $150 credit on their taxes.

Ballard said he supports both of these proposals.

“Virginians are in a pinch, and we’re seeing rising costs on everything, so anything we can do to help Virginians and save Virginians money is a good thing,” said Ballard.

However, not all lawmakers agree with the proposals.

Delegate Sam Rasoul said we should look at other things when it comes to the cost of living.

“While there are a variety of thoughts around different tax policies, what we hear from most people is that the cost of housing and the cost of utilities are really where we should be trying to focus the most, and as we move forward, we’re gonna work in a bipartisan way to try to tackle those, especially the utilities that are overcharging you,” said Rasoul.

He also questions where we would get the funding for exempting tips on state taxes.

Rasoul is concerned about whether the move would negatively impact funding for other things like teachers and mental health.

He thinks we should focus on issues affecting Virginians.

“The bigger issue actually when we talk to folks is housing and utilities,” said Rasoul.

Rasoul wants to lower the cost of utilities, especially electric rates. He said they are working on bipartisan legislation to have a temporary freeze.

“I’m hearing from constituents who are saying they’re getting electric bills that are over $1,000,” said Rasoul.

Ballard is also proposing legislation to lower electricity rates. He’s also a co-patron on a bill that would prevent any increases by Appalachian Power.

Both the car tax credit and the exemption for tips were in the Governor’s budget last year.

If they’re passed, Ballard said they would take effect July 1.

As for exempting cash on tips, Fleming said not only could the proposal help his staff, but it could also help his business.

“If our servers realize that their tips are not gonna be taxed at the state level, they may try a little extra hard. We’ve got great servers and they already do try very hard, but they might give their customers a little bit more. Their customers are gonna have an even better experience then they would have without this and then they’re gonna be repeat business for us,” said Fleming.


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About the Author
Keshia Lynn headshot

Keshia Lynn is a Multimedia Journalist for WSLS. She was born and raised in Maryland and holds a Bachelor of Arts degree in Law and Society from American University and a Master’s degree in Mass Communication from Arizona State University’s Walter Cronkite School of Journalism.