Federal Actions Causing Issues for Restaurants

Tuesday, July 29th, 2025 -- 11:01 AM

(Trevor Hook, Wisconsin Public Radio) Several provisions in the President’s spending law are being touted by hospitality groups as bolstering the state’s restaurant industry.

But, according to Trevor Hook with the Wisconsin Public Radio, the President’s increase in tariffs and crackdown on immigration are causing other problems for restaurants, two people in the industry told WPR’s “Wisconsin Today.”

The One Big Beautiful Bill Act, which was signed into law on July 4, contains several spending and tax provisions. The Wisconsin Restaurant Association supports several parts of the package, including tax deductions for employees who are tipped or earn overtime pay.

Those tax cuts allow qualifying employees to not pay federal taxes on up to $25,000 of tips per year. Single filers could deduct up to $12,500 in overtime pay. Both provisions will be in effect until the end of 2028.

Wisconsin Restaurant Association Executive Vice President Susan Quam told “Wisconsin Today” the move would put more money in employees’ pockets.

“A huge portion of those positions are filled by people who want to work part time and are either putting themselves through school or bringing in a supplementary income into their family,” Quam said. “So, to be able to deduct or not have to pay income tax on that first $25,000 in tips is really, really important.”

Quam also praised other parts of the spending package, like enabling business deductions that would lower a restaurant’s effective tax rate and making existing tax credits permanent that were set to expire at the end of the year.

But Dan Jacobs, owner of several Milwaukee restaurants and a member of the Independent Restaurant Coalition, criticized the tax and spending package.

He signed a letter with hundreds of other chefs nationwide denouncing various aspects of the legislation, including its impact on the environment and cuts to Medicaid and the Supplemental Nutrition Assistance Program, or SNAP. Jacobs told “Wisconsin Today” that because Wisconsin has a tipped wage of $2.33 per hour, servers are very reliant on tips for income.

The tax break on tips only covers a fraction of what salaried servers make annually, he said. “So $25,000 is not a lot of somebody’s yearly salary. I would say (for) our servers, that’s less than half of what their yearly salary is going to be,” Jacobs said. “So they’re still going to get taxed on their tips. They’re just not going to get taxed on that first $25,000.”

Jacobs also said tax incentives favor employees in the front of the house but fail to help line cooks or dishwashers working in the kitchen. “This is only going to help out one half of that restaurant when the other half is just left behind,” he said.

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