President Trump’s “One Big Beautiful Bill Act” is one step closer to becoming law after narrowly passing in the Senate with a 50-50 vote. Vice President JD Vance cast the deciding vote in favor of the bill, with Republican Senators Susan Collins (R-Maine), Rand Paul (R-KY), and Thom Tillis (R-NC) crossing party lines to vote with Democrats.
The bill’s passage has sparked immediate reactions across the hospitality sector, with major industry associations celebrating key provisions, while some labor groups and independent restaurant advocates voicing concerns.
Pro-Growth Tax Policies
The National Restaurant Association (NRA) and American Hotel & Lodging Association (AHLA) were quick to praise the bill’s inclusion of what it calls crucial “pro-growth tax policies.”
Sean Kennedy, Executive Vice President of the NRA, stated, “This bill includes the most important pro-growth tax policies restaurant operators need to continue to power the national economy. The inclusion of permanent policies for 199A qualified business income deduction, full expensing of capital investments, and the return of depreciation and amortization in the calculation of business interest expense will give restaurant operators working capital to invest in their businesses and employees.”
“No Tax on Tips” Provision Garners Mixed Reactions
The NRA also expressed satisfaction with the inclusion of policies like “No Tax on Tips” and Overtime, which Kennedy added, “will benefit the hospitality workforce.” He further stated, “We appreciate the work that has gone into getting this bill through the Senate and encourage the House to quickly pass it, sending it to the President for signature.”
However, the “No Tax on Tips” provision has drawn sharp criticism from some labor groups and the Independent Restaurant Coalition (IRC), who argue it disproportionately benefits front-of-house staff and omits lower-earning workers in the back of house.
Erika Polmar, Executive Director of the IRC, voiced her concerns: “We know Congress is trying to help workers at a time they need it most, and we are heartened to see the Senate listen to restaurant owners and take steps to make child care more affordable to restaurant workers. But restaurants and bars need a tax law that treats all businesses equally, not a patchwork of temporary policies that helps some workers and leaves others behind. By not changing the tax code to accommodate service charges, Congress is leaving millions of workers empty-handed and creating more confusion and uncertainty for a fragile industry. The temporary ‘No Tax on Tips’ provision will force restaurants using popular service-charge models to make costly changes to their businesses this year and again in 2028. It’s unfair to workers, and costly to business owners and taxpayers alike.”
Polmar concluded, “This bill is ultimately unfair to the line cooks, dishwashers, porters, and prep staff that are vital to independent restaurants. We urge Congress to amend the tax code so all gratuity-based income—tips and service charges—earns the same relief, giving businesses a single, stable set of rules.”
AHLA Lauds Tax Certainty for Hotels
The AHLA also lauded the Senate’s passage of the Budget Reconciliation package, emphasizing its role in preventing “major tax increases on both hotel employees and businesses.”
Rosanna Maietta, President & CEO of AHLA, stated, “The tax provisions included in the Senate bill provide small business hotel owners with the level of certainty they need to effectively operate amidst tremendous uncertainty resulting from years of inflation, trade impacts, and a softening of demand within the broader travel sector.”
AHLA specifically highlighted several key provisions it supports:
- Permanency for Small Business Deduction (Section 199A): AHLA notes that the majority of hotel owners are small business owners who license national brands. The expiration of this deduction would significantly increase their taxes, hindering reinvestment in employees and businesses.
- 100% Bonus Depreciation and Expanded Business Interest Deductibility: Making these permanent incentivizes capital improvements, supporting jobs, enhancing properties, and attracting new guests.
- Preservation of Like-Kind Exchange (Section 1031): Maintaining this provision is critical as it allows real estate owners to defer capital gains taxes if proceeds are reinvested into another property, thereby creating new jobs, improving communities, and promoting economic activity.
