By Waterbury Times/Published Jan 27 2026
Waterbury, CT

Recent national political rhetoric has renewed debate over whether tipped workers should pay income taxes on gratuities. Former President Donald Trump has publicly stated that tips should not be taxed, a position that has gained traction among service workers and voters across the country.

However, despite these statements, tips remain fully taxable in Connecticut, and there is currently no change in state law that would alter that reality.

Here’s why.

Federal Promises Do Not Override State Law

Any proposal to eliminate taxes on tips would first need to be passed by Congress and signed into law at the federal level. Even then, such a change would apply only to federal income taxes.

Connecticut, like most states, operates under its own tax code. The state is not required to adopt federal tax changes unless lawmakers in Hartford choose to do so.

Connecticut Taxes All Earned Income

Under current Connecticut law, tips are considered earned income and are subject to state income tax. This includes cash tips, credit card tips, and tip-sharing arrangements. Employers are also required to report tipped income, and workers are legally obligated to declare it.

To remove tips from state taxation, the Connecticut General Assembly would need to pass legislation specifically exempting them. As of January 2026, no such bill has been introduced or approved.

Campaign Statements Are Not Policy

While political statements can shape public discussion, they do not carry legal weight. No executive order or campaign pledge—past or present—can change Connecticut tax law without action from the state legislature.

Revenue and Budget Considerations

State officials have historically been cautious about narrowing the tax base. Exempting tips would reduce state revenue, particularly in industries such as restaurants, hospitality, and personal services—sectors with a strong presence in cities like Waterbury.

Any proposal to exempt tips would likely face debate over budget impacts, fairness across income types, and enforcement challenges.

What Would Have to Change?

For tips to stop being taxed in Connecticut:

1. Federal law would need to change (if the goal includes federal tax relief).
2. Connecticut lawmakers would need to pass a state-level exemption.
3. The Governor would need to sign the bill into law.

Until then, tips remain taxable income in Connecticut.

Bottom Line:
Despite national political promises, Connecticut workers should expect no immediate change to how tipped income is taxed. Any shift would require deliberate action from state lawmakers—not campaign slogans.

Waterbury CT Local News