Republicans are deploying former President Donald Trump's "no tax on tips" policy as a key plank in their campaign to win Nevada's 3rd Congressional District, a battleground where Democratic Rep. Susie Lee faces a challenge from Republican candidate Marty O'Donnell. This strategy is particularly resonant in Nevada, which has the nation's highest concentration of tipped workers due to its robust hospitality and tourism sectors.
O'Donnell, a composer known for his work on the "Halo" video game series, has made Lee's vote against a tax package that included the "no tax on tips" provision a central point of his campaign. He argues that Lee's opposition harmed constituents who would have benefited from the tax relief.
"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. He also attributes the current economic struggles, including inflation and a high cost of living, to Democratic policies.
Lee, who has represented the district since 2019, defends her vote by pointing to other provisions in the tax package that she claims were detrimental, such as cuts to Medicaid, SNAP, and healthcare. She also notes that the "no tax on tips" provision in the legislation, if it had passed as part of that bill, would have expired at the end of 2028. Lee and other Nevada Democrats support a separate proposal that would make the tax break permanent and address other issues with the current policy.
The race has attracted significant attention and funding from aligned super PACs. Safety and Affordability, an offshoot of the Trump-backed MAGA Inc., has committed nearly $3.2 million to advertising supporting O'Donnell, according to ad-tracking firm AdImpact. This spending puts pro-O'Donnell forces ahead in the advertising race in the district.
Trump first proposed the "no tax on tips" policy in June 2024 during a campaign event in Nevada, stating he was inspired by a Las Vegas server. The policy was included in a broader tax reform package signed into law last year.
However, Lee contends that the economic benefits of tax relief are being overshadowed by broader economic troubles, such as rising energy costs and a decline in tourism. "When people are feeling the pinch at home all across this country, the first thing they cut is their trip to Vegas," Lee said. Data from the Las Vegas Convention and Visitors Authority shows a 7.5% decrease in tourism between 2024 and 2025, with fewer lower-income visitors and a significant drop in international tourists, particularly from Canada.
O'Donnell, however, expresses optimism about Las Vegas tourism's recovery and defends Trump's past trade policies. He argues that high living costs are a result of Democratic leadership.
Labor unions are also actively involved in the race. The Culinary Workers Union, representing 60,000 hospitality workers in Nevada, has endorsed Lee. Union leaders acknowledge the relief provided by the "no tax on tips" policy but also highlight its limitations, such as income caps for deductions and its exclusion of automatic gratuities for large parties. They are advocating for legislative fixes to these issues.
Nevada's 3rd Congressional District is considered one of the most competitive seats in the state, with a diverse electorate that includes both working-class and affluent neighborhoods. Both Lee and Trump won the district in 2024, underscoring its swing-district status.