Republicans target Las Vegas congressional district with help from Trump's 'no tax on tips' policy

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LAS VEGAS (AP) — Susan Gonzalez plans to pay off her credit card now that she no longer needs to pay taxes on the dollar bills that she stashes away at the end of long shifts pouring beers and mixing cocktails in a smoky sports bar.

Thanks to President Donald Trump, “there’s more money in our pockets,” the registered Republican said. The Iran war might have spiked gas prices, but Gonzalez is still confident that the U.S. economy is getting stronger.

The Jackpot Bar & Grill, located about 4 miles (6.4 kilometers) from the Las Vegas Strip, is in the heart of Nevada's 3rd Congressional District, where Democratic Rep. Susie Lee is trying to fend off a challenge from Republican candidate Marty O’Donnell. The state has the highest concentration of tipped workers in the country because its economy is driven by the hospitality and tourism industries, making Trump's “no tax on tips” policy a critical part of his party's midterm pitch here.

The question for Nevada voters is whether they're seeing more benefit from lower taxes or more pain from the country's economic troubles, such as energy costs and declining tourism.

Lee’s district is a top target for the Republican Party in its fight to maintain control of the House. With a mix of working-class and high-income neighborhoods, it’s the most competitive of Nevada's four congressional seats. In 2024, both Lee and Trump won the district.

Lee has held the seat since 2019, campaigning as a moderate and highlighting her bipartisan record. O’Donnell, a composer known for his work on the “Halo” video game series, became his party's nominee this year with help from Trump and a $3 million personal loan.

The race has caught the attention of Trump-aligned super PACs. Safety and Affordability, an offshoot of MAGA Inc., committed this month to spending almost $3.2 million on advertising to help O’Donnell, according to the ad-tracking firm AdImpact. The total effectively matches the $3.1 million O’Donnell’s campaign has already spent on advertising reservations through November.

The heavy commitment puts pro-O’Donnell forces ahead by more than $1 million in the ad spending race in the district, where Lee’s campaign has spent $2.9 million and the Democratic House leadership super PAC House Majority Fund has put in $2.3 million.

Trump first announced his policy proposal at a June 2024 campaign event in Nevada, and he has repeatedly said that he was inspired by a Las Vegas server who suggested the idea.

“So we’re eating, and this beautiful young lady walks over, and I said, ‘How are you doing, everything good?’” Trump said in August. “'Sir, they’re taxing me to death.' I said, ‘Really? What are they taxing?’ ‘They’re taxing my tips. Sir, they should have no tax on tips.’”

The proposal was included in a sweeping package of tax breaks, social-services cuts and immigration enforcement that Trump signed into law last year.

O'Donnell has centered his attack against Lee for her vote against that bill.

“When she had an opportunity to vote for things that would actually help the people of the district, she said no,” O’Donnell told The Associated Press.

Lee attributed her vote to what she says were harmful and unpopular policies in the package. She also noted that the “no tax on tips” part of the legislation expires at the end of 2028.

"More importantly, they came at the cost of cutting Medicaid and SNAP and healthcare,” Lee told the AP at a recent canvassing launch in Las Vegas.

She and other Nevada Democrats support a separate proposal that would make permanent “no tax on tips” while also fixing what they say are issues with the current policy.

Lee said the tax cut isn't helping because tourism is falling off.

“When people are feeling the pinch at home all across this country, the first thing they cut is their trip to Vegas,” Lee said.

Nevada’s tourism fell 7.5% from 2024 to 2025, according to Las Vegas Convention and Visitors Authority CEO and President Steve Hill. Las Vegas hosted the Super Bowl and the second annual Formula 1 Grand Prix in 2024.

At a recent economic forum, Hill said high rollers are continuing to visit the city but lower-income visitors are not. The number of international visitors has also dropped significantly, especially Canadians who watched Trump feud with their country over trade and other issues.

O'Donnell said Las Vegas tourism is on the “comeback.” He said Trump's tariffs served as a necessary way to negotiate with countries “that have been absolutely ripping us off.”

The composer blames the high cost of living on Democrats. He recently told a crowd at the Republican midterm convention in Dallas that one good job used to be enough to raise a family, buy a house and “live a comfortable, fulfilling life while getting ahead.”

“Somewhere along the way, that deal got broken,” he said. “Now many need two incomes just to tread water, and we’re still digging our way out of Biden’s inflation crisis.”

While O'Donnell has help from Republicans' national war chest, Lee has the support of the political powerhouse that is the Culinary Workers Union, representing 60,000 hospitality workers in Nevada.

Secretary-Treasurer Ted Pappageorge said the current “no tax on tips" policy brings some relief but is “deeply flawed.” A married couple filing jointly can deduct only up to $25,000 of their tipped income, Pappageorge said. The policy also does not apply to automatic gratuities that are charged to large parties, he said. Lee and other Nevada Democrats want to fix that, he said.

“There's a history of our Democrats here fighting for fair taxation,” Pappageorge said.

On a recent weekend in Lee's district about 50 days before the election, members from the Culinary Union, the American Federation of Labor and the Congress of Industrial Organizations knocked on voters' doors, hoping to sway those still undecided.

Paul Peterman, president of the local chapter of the National Association of Letter Carriers, wearing a blue union T-shirt, a lanyard and shorts, walked to union households, carrying flyers supporting Lee and other Democrats. He asked a resident who he planned to vote for. “All Republican,” said the man, hidden behind his screen door. Peterman asked if he could leave a non-Republican flyer, and the man said, “No.”

“Sorry to bother you,” Peterman said as the door closed.

At the next door, the voter identified as an independent but said he'd vote for Lee. A voter at another house said who he plans to vote for was private. Nobody answered at the next few doors.

Peterman has been canvassing these neighborhoods for years, describing it as important union work.

“It sends a message that we’re all united, and you also need every hand on deck, too, to be successful in what you want to achieve,” Peterman said.