Service workers and some public officials on the Island are expected to see tax savings under  President Donald Trump’s sweeping federal tax and spending bill that was signed into law earlier this month and establishes new exemptions for tips and overtime pay.

 Trump signed H.R. 1, “One Big Beautiful Bill,” into law on July 4, that requires the U.S. Treasury Department to publish a list of occupations eligible for the exemptions by October, but the Tax Policy Center estimates that roughly 60 percent of U.S. households with tipped workers will receive savings,  averaging up to $1,800 per year. 

While some have skepticism for the overall bill, there is enthusiasm for a reduction in federal taxes on tips.

While prepping for the lunch shift on a recent sunny week day at the Sandbar in Oak Bluffs, Kelsey Lutzi says she’s troubled by the portion of her tips that are taxed and she is supportive of  the new deductions. Lutzi estimated that one-fourth to one-third of her paycheck earnings goes towards taxes currently.  

“Having such a large amount of our earnings go into taxes is disheartening,” she said. “It’s absolutely a benefit to have it untaxed.” 

 Restaurant owners on the Island also say that the new law could make it easier for them to find workers. Joe Monteirro, owner of 19 Raw Oyster Bar in Edgartown and 9 Craft Kitchen and Bar in Vineyard Haven,  said that this particular portion of the bill is beneficial for both middle class workers and for the restaurant industry as a whole.

“It’s an incentive for people to work in our industry and for growth in our industry,” he said.

Under the bill’s measures, tipped workers, such as servers, bartenders, and beauticians, can deduct up to $25,000 of their tip earnings if they make less than $150,000 or $300,000 if filing jointly. 

Still, some Island service workers remain skeptical if the law will be effective, also considering what else is in it. As previously reported, energy prices in Massachusetts are expected to rise with the new law and many are expected to lose health insurance. 

Lola Otukoya is a bartender at El Barco in Vineyard Haven and Letoile in Edgartown. She questions how long the tax cuts will truly last and if they will provide a solution to mitigate the low minimum wage that servers are paid. 

“I don’t hold any weight to this administration,” she said, frankly. “If [tax cuts] are going to offset our server minimum wage, then we’ll see if it’s true.”

Larkin Stallings, owner of the Ritz Cafe in Oak Bluffs, is in agreement the law could help his servers, noting the high amount that gets taxed from his employees’ tips and his own reservations about how the federal government uses these tax funds.

“Their pay gets eaten up by the taxes on their tips,” he said. “When you put this money into a big, black hole, who knows where the hell it’s going.”

However, Stallings has doubts about how impactful the bill will be when executed. He points to how the White House official website advertises that the bill means “NO taxes on Tips,” despite that the most an individual can exempt is $25,000.

“The devil is in the details. The facts on the ground are oftentimes different,” Stallings said. “I hope the government isn’t hurting us in the long run.”

Also benefiting in the new law will be workers who receive overtime pay,  such as police officers, firefighters, and healthcare workers. They’ll be able to deduct up to $12,500 individually and $25,000 jointly in their annual federal taxes (The deduction doesn’t apply to state and local income taxes or Social Security and Medicare payments subtracted from earnings). The White House said that the overtime deduction will yield average savings of $1,400 on average per person each year. 

Edgartown Chief of Police Chris Dolby said that he supports any effort that will assist his officers financially amid growing wealth disparities and housing insecurity on the Island. Recently, the six towns released drafts of Housing Production Plans (HPPs) that show the gravity of the Vineyard’s affordability. For instance, the affordability gap in Edgartown, defined as the difference between what a median-income household can afford and the median home price, is $1,253,500 for households earning 80 percent of the Island’s Area Median Income. 

“This Island becomes more unaffordable by the day and anything that helps our officers is a good thing,” he said.