Kansas Senate Republicans announced their intention to end taxation in tipped income last week, but the House's tax chair said it may not be necessary if passed federally.

Senate President Ty Masterson, R-Andover, announced Feb. 3 that the state would be seeking to end the state's taxation of tips in a joint news conference with U.S. Sen. Roger Marshall, R-Kansas. Marshall said he is "co-leading" the effort at the federal level with U.S. Sen. Ted Cruz's No Tax on Tips Act, although Marshall isn't among the bill's nine cosponsors.

"We love that idea from the federal government," Masterson said. "We want to follow that lead."

The chair of the Senate's Appropriations and Taxation committee said the state is modeling its legislation after a federal proposal. Ending taxes on tips gained steam after President Donald Trump pledged to end taxing tips in January.

A bill has yet to be introduced in Kansas, but Kansas Rep. Adam Smith, R-Westin, who chairs the House Committee on Taxation, said if taxes on tips are eliminated as proposed in Cruz's bill that action in Kansas wouldn't be necessary.

"The way I understand that if the federal government does something, that automatically flows through to Kansas," Smith said. "We don't need a separate bill, because it comes off of their federally adjusted gross income, which is where you do your federal taxes first, and then you do your state taxes, and we start in Kansas with that federal adjusted gross income number, which would already have that baked into it."

But there are several bills in U.S. Congress that propose changes to taxation on tips. While Cruz's bill proposes complete elimination of the tax, others seek to place a cap on how much tipped wages are untaxed.

The spokesperson for Masterson said Senate Republicans will continue to pursue eliminating taxes on tips while the federal legislation remains uncertain.

"That contention makes large assumptions about how the federal government will ultimately handle income from tips," said Mike Pirner, Masterson's spokesperson. "There are some bills in Congress that would completely remove it from taxable income while others propose a cap. We don’t want to be in a situation where Congress has an amount of tips income that is not taxed and yet it’s still taxed at the state level."

Idea popular among voters, questioned by policy experts

Ending taxes on tipped labor is viewed favorably across the political spectrum. An Ipsos poll from August found that 73% of Republicans, 73% of independents and 75% of Democrats support the idea.

But both right-and-left-leaning experts shared with USA Today that the proposals could be unfair to non-tipped workers, that it could create more tipped workers and that businesses could reclassify income. They also believe it would only impact a small sector of the workforce, with only about 2.5% of U.S. workers receiving a tip in 2023, according to Yale University's Budget Lab.

Still, the tax savings could be substantial for the people it does impact. Yale's Budget Lab estimates that the average family who gets the exemption could have $1,700 in tax savings a year, while the bottom fifth of the earners would save closer to $200.

Democrats open to idea

Kansas Democratic leaders issued a joint statement in response to the proposal to end taxes on tips. It criticized the proposal and for Republican's unwillingness to increase Kansas's minimum wage from $7.25 per hour but shared that Democrats are "open to a discussion on cutting taxes on tips."

“President Masterson’s proposal will do nothing to make eggs more affordable for Kansans — so we’re proposing something that will. Raising the minimum wage to $15 will put more money in people’s pockets," said Gov. Laura Kelly, Senate Minority Leader Dinah Sykes and House Minority Leader Brandon Woodard in a news release. "There is no reason workers in Kansas should make less than workers in Missouri. We’re open to a discussion about cutting taxes on tips.

"Still, the most important thing we can do for minimum wage workers is actually raise the minimum wage — which is embarrassingly low in Kansas.”