Youngkin proposes eliminating tax on tips in Va. budget

Gov. Glenn Youngkin announced Monday a budget proposal to exempt service tips from Virginia’s state income tax, an idea that’s gained bipartisan support federally.

In a statement, Youngkin said that Virginians who receive tips — hair stylists, restaurant workers, bellhops and other service industry professionals — would benefit from being able to claim deductions on their state tax returns to the tune of about $70 million annually.

President-elect Donald Trump proposed the idea of eliminating taxes on tips during the presidential campaign, and Vice President Kamala Harris, his Democratic opponent, endorsed the idea as well.

“We have delivered over $5 billion in tax relief to date, and we remain committed to lowering the cost of living for hardworking Virginians. It’s their money, not the government’s,” Youngkin said in a statement. “By removing tips from taxable income, it will directly increase the take-home pay of hundreds of thousands of Virginians and give them more buying power, which in turn will improve financial stability, stimulate local economies, and honor the value of their hard work.”

According to the governor’s statement, the state tax department and the Virginia Employment Commission estimate that more than 250,000 Virginians work in service and hospitality industries.

Shortly after the governor’s announcement, the Virginia Restaurant Lodging & Travel Association released a statement of support.

“Virginia’s tipped employees in the hospitality and restaurant industries do an amazing job every day to help our commonwealth welcome visitors and locals alike to our nation-leading restaurants, hotels, campgrounds and attractions,” VRLTA President Eric Terry said. “Helping these team members keep more of the tips that they earn in their pockets will be a welcome relief as consumer costs continue to put pressure on everyday families. We are committed to working with the Youngkin administration and the Virginia General Assembly to make sure that this proposal is as responsible and impactful for Virginia’s tipped employees as it can be.”