Tipped workers get wage floor, keep all tips, gain permanent tax break

What it does

This bill raises the minimum wage for tipped workers to match the federal minimum wage (currently $7.25/hour), eliminates the subminimum 'tip credit' that allows employers to pay tipped workers less, and makes permanent a tax deduction for tipped workers' income. It also expands the deduction limit for joint tax returns and adds safeguards to prevent fraud.

Why we flagged it

The bill's core mechanism is a wage floor for tipped workers (eliminating the tip credit) combined with permanent tax relief. Both provisions directly benefit low-wage service workers and are substantively aligned with worker protection.

What the text implies

• Elimination of tip credit may increase labor costs for restaurants, bars, and hospitality businesses; some may respond by raising menu prices, reducing hours, or cutting staff—effects on employment and consumer costs are not modeled in the bill.
• Automatic gratuities (mandatory service charges) are now treated as 'qualified tips' for tax deduction purposes, potentially expanding the deduction beyond voluntary tips and creating new audit/compliance complexity for IRS.
• Joint-return deduction limit doubles to $50,000, creating asymmetry: couples filing jointly receive twice the deduction of single filers earning the same income—may incentivize marriage or create fairness questions.
• TIN requirement and relationship/ownership restrictions (§ 224(d)(2)(D)–(E)) are anti-fraud measures but may exclude legitimate tip-sharing arrangements or family-business scenarios, narrowing the deduction's reach.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Tipped workers—predominantly low-wage service workers—gain a wage floor (eliminating subminimum pay), retain all tips, and receive permanent tax deductions on tip income. The bill directly addresses wage inequality and worker protections in a sector historically vulnerable to wage theft.

Who stands to gain

• tipped workers (wage increase + permanent tax deduction)
• hospitality and food-service workers (primary beneficiaries)

Named in the bill

Fair Labor Standards Act of 1938, Internal Revenue Code of 1986, Section 3(m) FLSA (tip credit), Section 6(a)(1) FLSA (federal minimum wage), Section 16 FLSA (penalties), Section 224 IRC (qualified tip deduction), hospitality industry, food and beverage service, cosmetology

Where it stands

1 cosponsor: 1 Democrats.

• Feb 13, 2026 — Introduced · Congress.gov: “Introduced in House”
• Feb 13, 2026 — Referred to House Committee on Education and Workforce and House Committee on Ways and Means · Congress.gov: “Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, for…”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Mar 2026 to Mar 2026. Those filings disclosed $19,750,000 in lobbying spend. A filing names 253 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Steven Horsford, the sponsor, reported $1,801,734 in PAC receipts in the 2026 cycle.

• Chamber of Commerce of the U.S.A. — $19,750,000 on 1 filing

Lobbying Disclosure Act filings through Jul 14, 2026. A filing shows who paid to lobby on a bill it names, not what changed.