Will ‘No Tax on Tips’ fix restaurants’ labor challenges?

The current White House administration’s “No Tax on Tips” bill is on the minds of restaurant operators everywhere. The idea is that starting in 2028, tipped wages would no longer be taxed. More take-home pay is a win, especially in an industry where tips often carry the bulk of someone’s income. The National Restaurant Association has welcomed the move, and many folks in the industry see it as a way to give servers a little more breathing room in their paychecks.

But if you zoom out from the headlines and take a closer look at what’s actually driving restaurant turnover, one thing becomes clear: This policy alone won’t be the end-all solution operators are hoping to drive employee retention.

The real problem isn’t taxes
Fast casual restaurants across the U.S. continue to face one of the highest turnover rates in the economy. According to PAR’s 2025 Industry Report, turnover sits at 122%. That number has come down slightly in recent years, but it still signals a lot of disruption.

Most in-store foodservice employees stay only 3 to 5 months. For operators, that means constant recruiting, training and reshuffling just to maintain a basic level of service. It’s expensive, time-consuming and exhausting for both management and staff.

Tax relief may help workers feel a bit more supported by the government and potentially add an extra sense of financial security, but it won’t solve the core issue that many restaurant jobs still don’t feel worth keeping. This can be addressed with the tech solutions many foodservice brands already use.