Iowa Rep. Ashley Hinson highlights benefits of ‘no tax on tips and overtime’ provision in megabill

INDEPENDENCE, Iowa — Northeast Iowa bar and restaurant owners say they’re hopeful provisions exempting tips and overtime from federal income tax included in President Donald Trump’s and congressional Republicans’ sweeping tax and spending bill will make the businesses more attractive to potential employees, aiding recruitment and retention.

Employees who work in jobs that traditionally receive tips could deduct up to $25,000 in tip income from their federal income taxes, while workers who receive overtime could deduct up to $12,500 of that extra pay.

The tax break phases out for individuals with incomes above $150,000 and for married couples with incomes above $300,000.

Cora Krueger, assistant general manager at Denali’s On The River in Independence, said he hopes the new tax provision will make positions in the service industry more desirable.

Krueger and J.R. Zingg, owner of Sanity Room in Independence, said it's hard to find servers and bartenders willing to work for $10 to $15 an hour and tips when they could potentially earn more elsewhere.

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“We're just trying to make our staff the happiest we can. But as employers, the bottom line is that we care about our employees, and we want to make them keep coming back and recommending people to work for us,” Krueger said. “ … We can't run a restaurant if we don't have servers and bartenders.”

The pair spoke during a roundtable discussion Tuesday in Independence coordinated by Iowa Republican U.S. Rep. Ashley Hinson to highlight the benefits of the “no tax on tips and overtime” provision in the reconciliation bill for full- and part-time employees.

Hinson touted the bill, which also includes making small business tax provisions permanent, for providing tax relief for working Americans.

“Trying to, hopefully, return more of your tax dollars to you,” she told business owners during the roundtable. “I think if there was one thing I heard as I've done many of these Main Street tours … I consistently heard was we just need the certainty. We need to be able to provide for our employees, give our employees more opportunities.”

Hinson called the small business tax provisions, combined with the new tax deductions on tips and overtime, a “real game changer and will hopefully help juice our economy and, most importantly, it's targeted at people who really need that tax relief the most.”

Crystal Blin owns 319 Social House bowling alley and bar in Independence, and has a hair coloring and stylist studio.

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Blin said she employs mainly part-time employees, who rely on the job to supplement their household income amid rising costs of living. She said she hopes the increased take-home pay from the reconciliation bill will stimulate local spending.

“They are looking to add more money to their household income, because somewhere there's often a shortfall, right?” she said. “We see prices increasing — rent increasing, their own insurance increasing — and so they have come to work for us to help ease some of that. Now, hopefully at the end of the day, they're taking home even more dollars in their pocket. And what our hope is is that then those dollars are spent here locally,” at the coffee shop, grocery store and more, “keeping more money in local communities.”

The roundtable comes in the wake of a new memo from the National Republican Congressional Committee, obtained by POLITICO, highlighting the messaging battle ahead of the 2026 midterms and directing members on how to sell Trump’s megabill during Congress’ August recess.

The NRCC urges GOP members to focus on tax relief, immigration and business reforms, and suggests holding roundtables and visiting hospitals, restaurants, and small businesses to highlight specific provisions of the bill.

Democrats argue that the bill prioritizes tax breaks for the wealthy and corporations, while relying on spending cuts to programs like Medicaid and food assistance to offset the cost, and are already planning rallies in red districts across the country.

Concerns were also raised by business owners during the roundtable about the high cost of health insurance and the challenges of maintaining business pages on social media platforms like Facebook. The discussion also covered the high costs of renovating and insuring buildings in small towns, the impact of flood insurance, and the difficulty of retaining staff in the restaurant industry.

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Hinson, speaking to reporters afterward, blamed rising health insurance premiums on the Affordable Care Act (ACA), also known as Obamacare. The comprehensive health care reform law enacted in 2010 expanded health insurance coverage to previously uninsured Americans. Key provisions include eliminating lifetime and annual limits on coverage, prohibiting denial of coverage for preexisting conditions, and providing subsidies to make coverage more affordable.

Hinson said Republicans “are taking a look at a number of provisions” to lower cost and provide more transparency in drug pricing.

“There's a good piece of legislation that I think is moving through the Energy and Commerce Committee right now that I think could be a meaningful solution that will help drive down those drug costs,” she said. “Plus, I think the President, in negotiating, obviously, he put into place a kind of a widespread policy and executive order for Pharma, and I think that will help drive down health care costs for all.”

New reporting from health policy organization KFF, through, notes the Trump administration is reducing federal rules and programs to protect patients from high health care costs, potentially pushing more Americans into debt.

Millions of people are expected to lose health insurance due to tax cut legislation. The nonpartisan Congressional Budget Office projects the law will increase the number of people without insurance by 10 million in 2034 through cuts to Medicaid and changes to the ACA marketplaces, as well as increase the budget deficit by $3.4 trillion.

Critics argue the CBO's estimates rely on assumptions about how states will implement or respond to policy changes, which can vary significantly and affect overall coverage rates. For example, the CBO may overestimate the impact of work requirements in Medicaid because it assumes a certain level of compliance and state enforcement that may not be accurate.

At the same time, significant increases in health plan premiums on state insurance marketplaces next year will likely push more Americans to either drop coverage or switch to higher-deductible plans that will require them to pay more out-of-pocket before their insurance kicks in, according to the KFF report.

The legislation also will raise the cost of certain doctor visits, requiring co-pays of up to $35 for some Medicaid enrollees.

Comments: (319) 398-8499; tom.barton@thegazette.com