Tipped Workers Deserve Better: Rep. Vasquez Vows to Make "No Tax on Tips" Permanent and Increase Minimum Wage

Strategic Insights -

U.S. Representative Gabe Vasquez (NM-02) has been a staunch advocate for the rights of tipped workers in New Mexico. On August 18, 2025, he stood in solidarity with workers at Barelas Coffee House in Albuquerque, expressing his support for making "no tax on tips" permanent policy and increasing the minimum wage for tipped workers. Vasquez is spearheading the TIPS Act, which aims to eliminate federal income taxes on tips and end the sub-minimum wage for tipped workers. The current Republican tax law is seen as a sham version of "no tax on tips," as workers will still pay taxes on tips and overtime, while seeing increased costs from rising health care premiums, food, and utility costs.

Key Takeaways:

  • The TIPS Act aims to make "no tax on tips" permanent policy and increase the minimum wage for tipped workers, as opposed to the current Republican tax law that expires at the end of 2028.
  • Under the current law, tipped workers in New Mexico earn a subminimum wage of just $2.13/hour before tips, putting them well below the poverty line.
  • The Republican tax law was crafted to fund permanent tax cuts for the wealthy, while temporary perks like "no tax on tips" and "no tax on overtime" were added to sell the deal to working Americans.
  • More than one in three tipped workers and two-thirds of restaurant workers already pay $0 in federal income tax based on their tax bracket, so they will feel no benefit from the current "no tax on tips" policy.
  • Paycheck-to-paycheck, tipped workers who are struggling to get by will feel poorer overall, as their pay flatlines and the cost of other things like health care, utility bills, and food skyrocket because of H.R. 1.
  • Rep. Vasquez is a cosponsor of H.R. 1314, the TIPS Act, to permanently eliminate federal income taxes on tips and end the sub-minimum wage for tipped workers.
  • One Fair Wage advocates joined Rep. Vasquez at the event to hear their concerns about the impact the Republican tax law is having on their ability to make ends meet.

Statistics:

  • More than one in three tipped workers -- and two thirds of restaurant workers -- already pay $0 in federal income tax based on their tax bracket.
  • The Republican versions of "no tax on tips" and "no tax on overtime" expire at the end of 2028.
  • The current subminimum wage for tipped workers in New Mexico is $2.13/hour before tips.

Sources:

  • New Mexico Rep. Gabe Vasquez's office
  • H.R. 1314, the Tipped Income Protection and Support (TIPS) Act
  • One Fair Wage