Subject: Re: What sticks in my gullet
It was said that the average waitress is not paying any Fed tax currently, and
Trump's "no tax on tips" policy would have no effect on the waitress/waiter tax burden.

It's worth pointing out that those two sentences don't both have to be true.

It is very likely that the average waitress pays no current Federal income tax. Waitressing is a fairly low-paying job, and most people who have very low incomes do not have any federal tax burden.

However, a major part of that is due to the EITC and other refundable tax credits. If you earn $25K as a waitress and have two kids, you'll have $3K in taxable income (with a $22K standard deduction) and have a tax liability of $300 or so - but you'll be eligible for a nearly $6K EITC. The first $300 would offset the tax liability, and the rest would come to you. So you won't actually pay any federal income taxes....

,,,,but having your tip income excluded from AGI can still help you. If we assume that $3K of our waitress' income was tips, and it was excluded from taxable income, that would bring her owed taxes down to zero. So now she gets 100% of the EITC - she has an extra $300 in her pocket.