Bill to end taxes on tips advances in Arizona House
Jan 24, 2025, 4:45 AM | Updated: 11:54 am
PHOENIX — Employees who rely on tips across the state may no longer be required to pay taxes on their earnings thanks to a no tax on tips bill.
House Bill 2081 proposes an exempt tax on tipped wages in Arizona. The bill was passed by the House Committee on Ways and Means and was the first measure to move forward at the 57th Legislature.
Who backed the no tax on tips bill?
HB2081 was sponsored by Rep. Gail Griffin, R-Hereford, and was backed by Republicans, while Democrats were against the bill. The measure is a part of the Republican 2025 House Majority Plan to decrease taxes and to help boost the economy. According to the Republican website, 73% of Arizona voters feel that state taxes are too high, and another 94% are worried about inflation.
“I worked in the service industry years ago and understand the challenges tipped employees face,” Griffin said in a press release.
“Tips are an expression of appreciation from customers for services provided. Tips are gifts and, in my opinion, should not be taxed. HB2081 ensures that Arizonans who rely on tips to support themselves and their families can keep more of their hard-earned money. I’m grateful to Chairman Olson for making this the committee’s first bill for the session.”
On Wednesday’s hearing Democrats didn’t agree with the new measure. Joseph Palomino, Director of the Arizona Center for Economic Progress, spoke at the meeting in opposition of the bill and said it “would provide little benefit for tipped workers and leaves out most workers with low and moderate income.”
“HB2081 would create a situation, which taxpayers with similar incomes would be subject to different tax liabilities,” Palomino said at the hearing.
The bill will now move on to the Rules Committee before heading to the Senate.