Amid an extended period of high inflation and a slowing economy, voters and politicians alike are looking for policies to make life more affordable for workers and families.
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During the summer of 2025, Congress passed the “One Big Beautiful Bill” (H.R. 1), which included a temporary “no tax on tips” provision that is framed as helping low-wage workers, while the rest of the legislation gives huge, permanent tax cuts to the rich in addition to making the largest cuts to Medicaid and SNAP in history. In West Virginia, similar legislation to eliminate the state income tax on tips was introduced during the 2025 legislative session.
While supporters of no tax on tips laws claim they help low-wage workers, these policies provide only meager benefits to the small share of workers who receive tips as a portion of their pay. In addition to the policy’s small and poorly targeted benefits, ending taxation of tips would likely expand employer use of tipped labor and undercut efforts to raise worker compensation. No tax on tips lets employers off the hook from paying their workers a fair wage while creating inequity in the tax system.
In contrast, raising the minimum wage provides a much larger benefit to a significantly broader range of low-wage workers. The Raise the Wage Act of 2025 would raise the minimum wage to $17 per hour by 2030 and gradually eliminate the tipped minimum wage. Raising the minimum wage to $17 per hour would benefit 186,000 low-wage workers in West Virginia, over 27 percent of the workforce.
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