Michigan workers who earn tips will keep more money in their pockets starting in 2025, thanks to new state and federal tax policies that eliminate taxes on gratuities.
- Michigan workers who earn tips will no longer pay state or federal taxes on gratuities starting in 2025, potentially saving up to $1,500 annually.
- Restaurant worker Antonio Dean says the extra money will help with necessities like improvements and new clothes.
- Financial experts recommend using the additional income to build better money habits, including refinancing debt and opening high-yield savings accounts
Antonio Dean, who works at an eastside fish fry restaurant, said the change will make a meaningful difference in his daily life.
"It's going to put more money in my pocket," Dean said. "It's going to give me something to look forward to when I get those tips knowing they're not taxed."
WATCH: TIPPED WORKERS EXCITED FOR NO TAXES ON TIPS
According to the governor's office, Michigan workers can save up to $1,500 annually by combining the state's no-tax policy on tips with the federal elimination of tip taxes.
Dean said he plans to use the extra income for necessities and improvements.
"Anything honestly. Improvements I need, new clothes, anything really," Dean said.
Financial experts say the beginning of a new year presents an ideal opportunity for workers to develop better money management strategies with their increased earnings.
Allison Horn with MSUFCU recommends several approaches to maximize the additional income, including refinancing high-interest debt, regularly reviewing budgets, and opening high-yield savings accounts.
"Your financial wellness is just as important as your physical and mental wellbeing," Horn said. "Understand how your money is working for you and all of the tools and resources that are available for you so you can manage your account in the way you intend to."
The policy change affects tip-earning workers across various industries, from restaurants to service businesses throughout Michigan.
"It gives everybody a few extra dollars for food and things like that," Dean said.
Here’s a bit more from Horn and MSUFCU for neighbors to consider:
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