Youngkin hopes to stop taxing tips for Virginia service workers
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Gov. Youngkin announced Monday a new proposal that would exempt tips from the state income tax.
Why it matters: Tips make up an increasingly large share of Virginia workers' pay, especially for restaurant workers, according to data from payments company Square.
The big picture: Youngkin unveiled the proposal Monday morning at McLean's Restaurant on Broad Street, ahead of the state budget he'll present later this week.
- No tax on tips is the first of a "broad range of tax relief" budget amendments he plans to introduce this week, the Times-Dispatch reports.
- If passed, the proposal will leave around $70 million a year in the collective pockets of the 250,000 restaurant workers, hair stylists, hotel workers and more in the state, according to the governor's office.
How it'll work: Virginians who earn tips (and report them) would be able to claim the gratuity as a deduction on their state tax return, per a news release.
Fun fact: Monday's event at McLean's was at least the fifth public event the governor has held at the diner near Scott's Addition since he was elected three years ago.
- And like any good regular, Youngkin tipped staffers well, leaving about 32% on his bill (much higher than the 20% industry standard), according to the picture he posted on Facebook.
Virginians as a whole are less generous, tipping an average of 15.43% on restaurant bills as-of October 2024, per Square data.
Worth noting: For Virginia restaurant workers, the profession most closely associated with relying on gratuity for their income, tips made up 23% of restaurant workers' pay in 2024, up from 19% in 2019, per Square.
- Nationally, tips made up 23% of restaurant worker pay — up significantly from 14% in 2019, according to Square's report.
What's next: The General Assembly will take up Youngkin's tip proposal, and all his budget amendments, when it reconvenes for its next session on Jan. 8.