"Speaking on CNBC Tuesday morning, McDonald's CEO Chris Kempczinski was asked how the fast-food chain would be affected by the "no tax on tips" provision of the Big Beautiful Bill, which President Donald Trump signed into law in July. Proponents of the change say that it will lower taxes for a variety of employees, including restaurant servers. At McDonald's, workers don't take tips, Kempczinski said, meaning that the chain's workers won't see a change."
"Under federal law, restaurants can pay workers as little as $2.13 an hour as long as they make the federal minimum wage of $7.25 an hour once tips are included. That has created "an uneven playing field," with some restaurant operators paying less in employee wages, Kempczinski said. "If you are a restaurant that allows tips or has tips as part of the equation, you're essentially getting the customer to pay for your labor, and you're getting an extra benefit from no taxes on tips," Kempczinski said."
McDonald's workers do not receive tips and therefore will not benefit from the "no tax on tips" provision of the new law. The provision reduces tax burdens tied to tip income, which advantages businesses that rely on gratuities. Federal law allows employers to pay as little as $2.13 per hour if tips bring total pay to the $7.25 federal minimum. That practice contributes to an uneven playing field between tipping and non-tipping restaurants. Some service and gig workers outside certain jurisdictions depend heavily on tips to reach living wages. McDonald's leadership framed tipping as shifting labor costs onto customers.
Read at Business Insider
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