Sure, Melissa Colburn will be happy to see a few extra bucks in her paycheck.
Working at Harlow’s Pub & Restaurant in Peterborough, a recent change in federal tax law means she’ll get to keep more of the tips she earns from her customers.
That’s not to say it’ll make a huge difference.
“It’s paycheck to paycheck, you know what I mean? So, it’s not like I can even pretend like I’m going to do something fun with it,” Colburn said. “Just things, things that you need to live. Everything’s so expensive.”
The new law, part of the “One Big Beautiful Bill Act” championed by President Donald Trump and congressional Republicans, includes a provision known as “no tax on tips.” It’ll let people who earn gratuity — including service-industry workers like Colburn — deduct up to $25,000 in tips from their federal income taxes. That means most service staff will be taxed only on their hourly wages, which are usually lower than the amount they make in tips.
The changes are currently in effect until 2028.
Colburn, who works four lunch shifts a week at Harlow’s and earns roughly $100 in tips per shift, could deduct that entire portion of her income, which averages out to about $20,000 in the year.
She hasn’t yet estimated how much money will stay in her pocket due to the changes, but said it could add up to a “considerable amount.”
“The base of your pay in this industry is your tips, so it’s a good chunk,” she said.
Sabra Angeloro, a manager and bartender at Barley House in Concord, said the extra dollars “will definitely show.” She said most of the full-time servers she knows strive for $800 to $1,000 in tips each week.
She predicted the tax benefits could help the industry, but not necessarily by drawing in more workers.
“It will keep, maybe, people staying in it more that are already in it,” Angeloro said.
Trump’s bill included a similar “no tax on overtime” provision, capped at $12,500 in deductions of income made in overtime.
Most of the other tax breaks included in the bill, however, will benefit the wealthiest 10% of the population, according to the nonpartisan Congressional Budget Office. The bottom 10% of earners will likely lose money as the federal government reduces social and safety net services, like Medicaid and food stamp programs.
