Restaurants Concerned That “No Tax on Tips” Leaves Majority of Kitchen Staff Empty Handed; Welcome Child-Care Credits for Restaurant Workers

WASHINGTON, D.C. –  Members of the  Independent Restaurant Coalition (IRC) today issued the following statements on the passage of the “One Big Beautiful Bill” in the Senate: 

Erika Polmar, Executive Director of the Independent Restaurant Coalition: “We know Congress is trying to help workers at a time they need it most, and we are heartened to see the Senate listen to restaurant owners and take steps to make child care more affordable to restaurant workers. But restaurants and bars need a tax law that treats all businesses equally, not a patchwork of temporary policies that helps some workers and leaves others behind. By not changing the tax code to accommodate service charges, Congress is leaving millions of workers empty-handed and creating more confusion and uncertainty for a fragile industry. The temporary ‘No Tax on Tips’ provision will force restaurants using popular service-charge models to make costly changes to their businesses this year and again in 2028. It’s unfair to workers, and costly to business owners and taxpayers alike. 

“This bill is ultimately unfair to the line cooks, dishwashers, porters, and prep staff that are vital to independent restaurants. We urge Congress to amend the tax code so all gratuity-based income—tips and service charges—earns the same relief, giving businesses a single, stable set of rules.” 

Caroline Glover, IRC member and owner of Annette in Aurora, CO: “Affordable child care keeps parents in our kitchens and dining rooms. These reforms reflect what independent restaurants demanded—practical, bipartisan help that lets staff focus on their craft instead of scrambling for care.”

Dan Jacobs, IRC board member and Chef & Owner, DanDan & EsterEv, Milwaukee, WI: “Tax relief should apply to everyone who makes a restaurant run—not just the people guests see. Line cooks, dishwashers, porters, and prep staff are essential, and many are paid through service charges because state law doesn’t allow tip pooling. Leaving them out isn’t just unfair—it punishes restaurants trying to do the right thing. That’s not relief. That’s instability we can’t afford.”  

Over the past year the IRC mobilized restaurateurs in two Capitol fly-ins, partnered with the First Five Years Fund on a bipartisan Senate reception, ran member webinars, and IRC co-founder Andrew Zimmern participated in  an Instagram Live—all pressing Congress to help working parents afford reliable care. Those efforts paid off: the bill expands the Child and Dependent Care Tax Credit, raises the Employer-Provided Child Care Credit, and modernizes Dependent Care Assistance Plans.

More than 600 business owners and restaurant workers affiliated with the Independent Restaurant Coalition (IRC) sent a letter to Congressional leadership urging changes to the “No Tax on Tips” provision in the budget reconciliation package. Economists are raising concerns about the No Tax on Tips proposal. A report from the Economic Policy Institute argues the proposal would incentivize employers across industries to prompt for tips and reclassify workers to avoid paying minimum wage. The Congressional Budget Office projects that the No Tax on Tips proposal could increase the deficit by $40 billion through 2028. The Yale Budget Lab warns that “a tax break that favors one form of income over others creates opportunities for tax avoidance,” noting the true cost of the legislation will be hard to predict.

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