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Tax Credit for Restaurants Distributing Service Charges to Non-Management Staff.

This bill offers a new tax credit to restaurant owners who distribute mandatory service charges directly to their non-management employees as wages. The goal is to reduce the employer's Social Security tax burden associated with these payments. For non-management restaurant staff, this formalizes how service charges contribute to their income, potentially leading to a more stable, taxed wage component.
Key points
Employers can claim a Social Security tax credit for service charges paid as wages to non-management employees.
The credit is limited; employers must choose between claiming the credit for traditional tips or for service charges, but not both.
The amount of service charges eligible for the credit cannot exceed 25% of the restaurant's annual gross receipts.
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Additional Information
Print number: 118_HR_8401
Sponsor: Rep. Blumenauer, Earl [D-OR-3]
Process start date: 2024-05-15
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Summarized by: gemini-2.5-flash-preview-09-2025
Source data: api.congress.gov
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OFFICIAL LEGAL TITLE

Restaurant Service Charge Fairness Act

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 118_HR_8401.

Which chamber initiated this legislation?

This legislation was initiated in the House of Representatives.

When did the legislative process begin?

The process officially started on 2024-05-15.

What are the main provisions?

Key points include:

  • Employers can claim a Social Security tax credit for service charges paid as wages to non-management employees.
  • The credit is limited; employers must choose between claiming the credit for traditional tips or for service charges, but not both.
  • The amount of service charges eligible for the credit cannot exceed 25% of the restaurant's annual gross receipts.
What is the specific legal status?

The current status is Expired.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Rep. Blumenauer, Earl [D-OR-3].

What is the latest detailed status?

The latest detailed status is: Referred to the Subcommittee on Social Security.

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-25.

CATEGORIES

Taxes Labor