Tips Paid to Street Musician not Taxable in New Mexico

Jun 29th, 2016

The New Mexico Administrative Hearings Office recently decided that tips paid to a street musician were not subject to the gross receipts tax.

The musician regularly performed at Santa Fe Plaza, where he collected $20 to $50 in his tip jar during each of his performances. Passers-by could choose to tip the musician or to enjoy the music without paying.

The decision concludes that these payments were not taxable because people paid the money without any obligation to do so. Since optional tips are not subject to the gross receipts tax, the money placed in the tip jar was not taxable.