TRENTON, N.J. – A proposal to exempt service workers’ tips from state income taxes has officially stalled out in Trenton, as the Democrat-controlled legislature wrapped up its final session of the year by advancing dozens of progressive and far-left policy measures instead.
The “No Tax on Tips” bill — formally known as Senate Bill 3741 — was designed to exclude gratuities from New Jersey’s gross income tax, a move aimed at easing the financial burden on waiters, bartenders, and other tipped employees across the state. But despite bipartisan sponsorship and early optimism among small business advocates, the bill never made it to a final vote before adjournment.
Republican Assemblywoman Dawn Fantasia said the legislation is “dead in the water,” criticizing majority Democrats for “ignoring the working-class people who depend on tips to survive.”
The measure, introduced in October 2024 by Sen. Vincent Polistina (R-Atlantic) and co-sponsored by Sens. Tiver and Amato, would have classified tips as a form of “property acquired by gift,” effectively exempting them from state taxation. Supporters argued the change would align New Jersey with similar federal efforts to protect tip income and bolster the hospitality sector.
However, the bill was overshadowed in the session’s final days as lawmakers pushed through a flurry of other progressive priorities, including new environmental mandates, housing reforms, and expanded labor regulations. With the two-year legislative session ending, S3741 now expires unless reintroduced in the next session.
Fantasia said the decision not to advance the proposal “sends a clear message that Trenton isn’t listening to the people actually serving tables and pouring drinks every night.” The bill’s demise marks a setback for the state’s Republican caucus, which had touted the measure as a straightforward, bipartisan tax relief plan for low- and middle-income workers.
