3 ms·

I don't believe retail sales tax applies to tips in most (any?) states.

• deleted 3y ago
  [deleted]
• Ekaros 3y ago
  Why not? Why shouldn't sales tax or whatever tax also be fully paid for each received tip? It is not like other business gets to avoid taxes.
  • woodruffw 3y ago
    In principle: the money goes completely to the employee(s) being tipped, so it doesn’t make sense to tax the business for money it doesn’t receive.
    • Ekaros 3y ago
      Why should that matter? Let's say you run software consulting. And most of the price goes to labour. Would that not mean that sales tax should only be applied to part going to business itself?
      • woodruffw 3y ago
        Because sales tax is a tax on a sale, not on your employees' wages. Payroll and income tax (among others) apply to wages. Whether payroll tax applies to tips depends on the municipality, but income tax always does.